The Bailout

There are some questions that I would like to ask and try to answer regarding the present financial crisis and the proposed bailout by the Bush administration. Firstly, how did Henry Paulson the Treasury Secretary arrive at the figure of $700 billion and why is the figure not, a wee bit over $600 billion or just under $800 billion or $523 and a bit billion? Secondly, will CEOs, like Richard Fuld from Lehman Brothers, who spent most of the last few months in his job avoiding queries on his firm's exposure to toxic subprime debt and who received a $22 million pay off, be asked to return some of the money they were given? Finally, what will Wall Street do with the money and who is going to give them it?
The two questions contained in the last sentence, are easy to answer. The taxpayer will pay for the bailout and the banks will then loan the taxpayer back his or her money at a slightly higher interest rate than has been the case up until now but it will be a bit more difficult to get that loan because the banks will want to make sure that they are going to get "their" money back. Yes, that's right, "Joe Soap" gives the bank money and the bank gives it back to "Joe" as a loan providing it agrees that "Joe" is creditworthy and some of us don't think Capitalism is absurd! Now, will the CEOs who have received their fat cheques return some of the money? Another easy to answer question; of course, they won't that is not how Capitalism works. Finally, how did Paulson's arrive at the figure of $700 billion? Well, if you are going to provide a welfare programme for your greedy mates, you don't want to be chasing peanuts, do you?
It gets even better though; not only are the plebs at home expected to help everyone, who speculated and lost, back onto their feet, but foreign governments have also been asked to buy up bad US debt. Germany's response has been a definite "no"1 and the realisation from this corner of the planet is that what Paulson has arrived at is a strategy that will ensure that in the longer term, the very idiots who caused this disaster, the same bunch who have walked away with bonuses and fat pay cheques for years, will be let off the hook. Nevertheless, the suspicion has to be that we are witnessing not a resuscitation of a global financial system that is dominated by the United States, but rather the ushering in of a global financial order that is no longer dependent on the United States. George W Bush has done a fucking marvelous job, hasn't he?
1 http://www.dw-world.de/dw/article/0,2144,3662664,00.html