PIRATE ECONOMICS & MARKET SOCIALISM

Imagine getting behind on your bills. Then imagine taking on debt through your credit cards to make up the difference. Now imagine how life would be if you could write-off that debt at the end of the year. What a sweet deal, right?


Well, guess what? This is exactly what the Bush administration's Treasury Department is allowing Corporate America's largest financial institutions to do, as they acquire collapsing financial institutions (with taxpayer funded bailout money, no less). Because of a simple five-sentence note that was added to Sec. 382 of the tax code (on Sept. 30th) it looks like the American taxpayer will fork over an additional $140 billion to Corporate America. Here's what was changed:

Section 382 of the tax code was created by Congress in 1986 to end what it considered an abuse of the tax system: companies sheltering their profits from taxation by acquiring shell companies whose only real value was the losses on their books. The firms would then use the acquired company's losses to offset their gains and avoid paying taxes.

While the financial world was fixed on the Bush administration's request for a $700 billion bailout of the banking industry the Treasury Department issued a five-sentence notice, which attracted almost no public attention, effectively repealing "no write-off" provision of Sec. 382. And did I mention that the financial institutions are using bailout funds to purchase distressed firms?

So, this is what we have ... You and I pay for a bailout. The idea behind the bailout is to kick-start consumer lending by providing banks with taxpayer money. Instead, banks sit on the money and/or look for good deals in the form of collapsing financial institutions. Taxpayer dollars are used to purchase these institutions. Then we pay for the losses these firms bring with them.

Now, what was it that the Republican Ticket called it when you take taxpayer money and shift it from one sector of the economy to another? Oh, yeah ... socialism.

If you want to read what this all means, check out Naomi Klein's excellent article, which describes President Bush's "final pillage" of the American taxpayer - the bailout of America's financial institutions.

- Mark