The $700B bailout is a huge scam

Today some detail leaked out about the $700B bailout package that Hank Paulson has requested on behalf of the banks. Wall Street Journal had an article in a very obscure section disclosed some of these details:

First, it appears that the bailout is not restricted to mortgage debt or mortgage backed securities. Even credit card debt may be included. So this is intended to be a wholesale bailout for the pure benefits of the banks.

Second, Paulson and Bernanke believed that these bad debts should be priced based "held-to-maturity: formula, not the current book value. So the bailout is a complete giveaway to the banks.

You may not understand what held-to-maturity (HTM) valuation accounting means. Let me explain, when a bank purchased a debt security, it paid, say, $1000 for that debt. Under HTM, the debt will always be listed as $1000 in value, no matter what the current value of the debt may be. Obviously most of the debt securities that the banks are holding now have declined significantly in value, because the debtors don't have the ability to pay in many cases. It is very common some of the debt securities are trading at below 30 cents on the dollar. That means the $1000 asset that the bank holds is now worth only $300. Yet Hank Paulson and Ben Bernanke would like to give the banks $1000 (HTM value) for the assets that worth only $300.

Now you understand that the whole bailout is a scam. It is a scheme to enrich the banks at expense of taxpayers! How dare they are! They thought the public is so gullible that they would not even understand what is going on. That is why they brazenly requested $700 B complete giveaway for their friends on the Wall Street. When asked why $700 billion? You know what they answered: "we don't know. It is an arbitrary number!"

People, are you really so sheepish that you are willing to be fleeced? You got to stop this criminal deception!

By the way, the US government does not even have $700B to spare. It has been running budget deficit since Bush took the White House. National Debt already stands over 10.6 trillion dollars. Where is this money coming from? It is going to come from printing from paper! That means inflation will for sure to go up. It is just a form a stealth tax on all the savings of ordinary people.

I am really sickened by this. All these criminals! Because they think people are so stupid that they can get away from it.

A lot of people argue that we have to do this bailout. No, we don't. Yes, the banks are not lending right now. That is healthy, because US is already overly in debt. We all need to de-leverage. That means many banks will HAVE to go bust! We cannot simply re-inflate the financial system to create another bubble! We need to take the pain. The banks first, then American consumers. Yes, we have to pay higher interest rate. Borrowing will be more difficult. Consumer spending will slow down. But That would be normal. Isn't overspending and over borrowing that got us into this mess in the first place? Why do we want to give $700B easy money for the banks so they can lend unscrupulously and invest badly again?

You have to watch this video. God bless Marcy Kaptur, the Democratic Representative from Ohio.