BAILOUT MASTERS ... "GENIUS"

I've always gotten a kick out of these cartoons ...



I especially like this today because Wile E. Coyote helps explain what's really happening with our bailout plan, and how it's currently blowing up in the face of the American taxpayer. Here's how it's happening.

As the Federal Reserve and Treasury Department continue to shove free money and loss guarantees on Wall Street financiers, they seem to believe that the appearance of "recovery" (in the stock market) and small returns ("As Banks Repay Bailout Money, U.S. Sees a Profit") make them genius-like. They did, after all, "save the world" from economic disaster.

What's not discussed in these "save the world / we're making money" narratives is how the U.S. taxpayer is now on the hook for trillions of dollars in loss guarantees ... which were generously offered up by the Federal Reserve and the FDIC. Why is this important? Because, as Mr. Wile E. Coyote found out, the finaciers don't have to worry about the toxic assets on the books because they're just dumping them off - or funneling them back - on to the federal government (see Wile E. Coyote clip if you're having trouble understanding how this works).

Apart from the Fed and FDIC guarantees, we shouldn't lose sight of the fact that at least one source has made it clear that even if the banks are paying back $4-12 billion that the banks are still in the red to TARP for $148 billion. This means that every American is still taking it on the chin financially (about $1,200 each). Still, we are being told that "it's all good."

Finally, we want to keep in mind that one reason (perhaps the only reason) the banks are returning some of the TARP money so soon is really tied to greed. As TARP recipients, paying some of the money back is the only way they can start giving out the bonuses that they've "earned" over the past year.

I suspect that once the bailout funds dry up that this thing will blow up in our face again. Genius, indeed.

- Mark