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Treasury Department: US economy needs indefinite life support

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posted on Sep, 14 2009 @ 02:42 PM
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The US economy is recovering from the shock of last year’s banking collapse, but could continue to need financial assistance for an indefinite period into the future, the Treasury Department stated in a report released Monday.

The report (PDF), entitled “The Next Phase of Government Financial Stabilization and Rehabilitation Policies,” states that “although we are rolling back emergency support programs that are no longer needed, significant parts of the financial system remain impaired. Unanticipated events could intensify pressure on the financial system. In this context, it is prudent to maintain capacity to address unforeseen developments.”

The report said, as quoted by The Hill: “In those markets where conditions have improved, it is unclear whether the improvements achieved to date will persist without a period of continued government support.”

Given the usually subdued and diplomatic language used in government reports on the economy, such a declaration will likely be read by many economists as an indication that there could be trouble ahead for the economy.

The report does have a measure of good news. For instance, a $250 billion “placeholder” rescue fund that President Barack Obama had held over for the 2010 budget will now be canceled, due to a lack of need. But the original $750 billion TARP program, passed in the last months of the Bush administration with the support of then-presidential candidate Obama, will remain in place indefinitely.

President Obama gave an address Monday on Wall Street, where he said “the work of recovery continues,” according to the Guardian’s live blog.

The president also issued a warning to the banks whose balance sheets collapsed last year.

“Hear my words: We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis. Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.”

However, as many observers have noted, Wall Street already appears to be returning to old habits. RAW STORY reported earlier this month that investment banks on Wall Street are creating a new class of securitized assets, based on life insurance polices that were purchased from terminally ill people. This new investment class is profitable only if the people whose policies were securitized die when they were expected to — or sooner.

Obama’s plan for a wholesale overhaul of the US’s financial regulatory framework, which the White House announced in June, has been criticized by some for concentrating too much power in the hands of the Federal Reserve, the US central bank that some economists blame for the current fiscal crisis.

Others — mostly Wall Street insiders — have criticized the plan for being too stringent and possibly resulting in investors moving their money off-shore to places with fewer regulations.
rawstory.com...

So now we have the Treasury Department basically saying unlimited funds are needed for the continuity of "the system". Incredible. At least they are being honest.
Which is more than we can say about 99% of the politicians and talking heads.

Government and the FED have no solutions except "stricter controls and regulations". All that means is that in a few years we will all be in the same boat again and have new faces to blame.

The entire system needs to be scraped, those responsible for creating it and those who profited through manipulation and backdoor deals need to be held responsible and accountable for their ruination of the economy and destruction of so many families and lives.




posted on Sep, 14 2009 @ 05:54 PM
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reply to post by warrenb
 


The only alternative is reduce spending.. if you reduce spending millions will be laid off in months... the economy collapses.

If you print money to inflate government to hire people to keep the economy going.. the economy/government collapses .. option one is instantanious, option two takes a long time.


Reduce spending with reducing trade deficites, end all forms of free trade and tax shelters and we will have the worst depression we have ever had.. but in the long term we will be much healthier...

Continue with our current plan and we will be A-OK in the short term, but fail in the long term.

Governments are notorious for being very shortsighted .. politicians are lawyers and actors, they know little to nothing about economics..



posted on Sep, 14 2009 @ 06:02 PM
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Originally posted by Rockpuck
Governments are notorious for being very shortsighted .. politicians are lawyers and actors, they know little to nothing about economics..


You know, I disagree with that. I think they know alot more about economics than you think they do. The problem is very similar to the NFL connundrum of having your coach also be the team general manager. The GM has to look out for the long term productivity of the team while the coach is most concerned with "win today" because his job is on the line and his position is expected to produce immediate results. To that end, "We the People" have been somewhat to blame about creating politicians who refuse to see the forest for the trees. Their #1 priority is to succeed now, future impacts be damned because they know the next election is always just around the corner and the average voter only cares about today inside the voting booth.

I'm in no way saying elimination of term limits or longer terms for elected officials is something that should be done by identifying this, BTW. I am saying that the average voter should be the one educated on economics so that when a politician makes a decision which will hurt like a bastard today, but make for a much stronger tomorrow, the voters won't be so quick to call them a failure and vote them out.



posted on Sep, 14 2009 @ 06:34 PM
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reply to post by burdman30ott6
 


Fact of the matter is the vast majority of politicians are lawyers, they have almost no training in economics.. its akin to having your dentist preform heart surgery..

The economic policies are being established by representatives to the largest investment institutions.. they are concerned with short term stability to fortify their positions against the long term decline... as the broader economy succumbs to the depression, the largest 5 banks will be virtually immune.. their objectives are accomplished.

The politicians who put forth the votes to make it happen are ignorant.. they did not draft the bailouts, $%^ most didn't even read the bailouts let alone understand what they did..



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