Ben Bernanke, Chairman of the Federal Reserve, and George Bush
A lot of people got rich arranging sub-prime loans. The borrowers, mostly poor and largely Mexican, paid enormous fees and penalties for those loans, particularly if they re-financed within a couple of years. Borrowers then lost property because they couldn't keep up the payments, since every last bit of financial cushion they once owned was now in the hands of the people who arranged the loans.
The Federal Reserve wanted to help. So a few days ago it bailed out the LENDERS by lowering the discount rate.
The poor earn the money, but it seems that those who already have plenty end up with it. No wonder we have a widening disparity between rich and poor. It appears that our goal is to become a society modeled on third-world countries.
I think the wealthy in America are penny wise and pound foolish. Don't they realize that they will live better when their fellow citizens are middle class rather than lower class? Desperate people do things like electing Huge Chavez, the current President of Venezuela. And people like Hugo Chavez aren't interested in democracy. But then, it seems Americans today care more about winning than in having a democracy. There was a time when Americans really believed in democracy, but that time seems to be past.
Perhaps our grandchildren will be going to China to find jobs.
This is what Market Watch had to say about the bailout:
Commentary: Where have you gone Paul Volcker?
By Irwin Yamamoto, The Yamamoto Forecast
Aug 22, 2007
"KAHULUI, Hawaii (YF) -- We warned investors of the subprime mess, the real estate bubble, the troubles with the hedge funds and the stock market sell-off before these international headlines became reality.
"Our next warning? Inflation. On Aug. 17, the Federal Reserve blinked when it lowered the discount rate.
"In the summer of 2007, Fed Chairman Ben Bernanke encountered his first major crisis -- and he panicked. Basically, the financial community coerced and forced him to do something he was totally against -- give up the fight on inflation.
"In the past, whenever the Federal Reserve attempted to rescue the financial markets, something bad ensued. A price needs to be paid. Ramifications follow.
"Prior to the chaos in the global markets, the Fed clearly stated how inflation was its biggest worry.
"For months, Mr. Bernanke pointed out that inflation remained his number one concern.
"Furthermore, the inflation rate had been running over 2%. This pace hovered at the higher end of his target. Then a few weeks later, an orchestrated effort by international central banks to pump in billions in liquidity into the banking system took place. The plan was followed by the lowering of the discount rate by a half-percentage point from 6.25% to 5.75% in the U.S., an injection of funds to the tune of $120 billion..."
http://www.marketwatch.com/news/story/have-you-gone-paul-volker/story.aspx?guid=%7BFC39F929-B835-431D-90E7-C48585790133%7D
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