Recovery Plan fr Hell-What Wall Street Wants

[katty]

Michael Hudson

more: http://www.counterpunch.org/hudson02112009.html

EXCERPT: But this clearly is only Stage One of a two-stage plan that has not yet been announced, although the Wall Street Journal’s op-ed page has provided enough hints trickling out for the past three months to tip the hand of Wall Street’s “dream recovery plan.”

It is not exactly what most people are hoping for. In fact, it threatens to be a nightmare scenario for the economy at large. Watch for the magic phrase: “equity kicker,” first heard in the S&L mortgage crisis of the 1980s.

The first question to ask about the Recovery Program is, “recovery for whom?” The answer is, for the people who design the Recovery Program and their constituency, the bank lobby. The second question is, what is it they want to recover? The answer is, another Bubble economy, having seen the Greenspan Bubble make them so rich with his particular kind of “wealth creation”: wealth in the form of indebtedness of the “real” economy at large to the banking system, and unprecedented capital gains to be made by riding the wave of asset-price inflation.

For the financial elites, the problem is that it is not possible to inflate another bubble from today’s debt levels, widespread negative equity, and still-high level of real estate, stock and bond prices. No amount of new credit or capital for the banking system will induce banks to provide credit to real estate that already is over-mortgaged, or to individuals and corporations already over-indebted. All professional observers have forecast property prices to keep on plunging for at least the next year, which is as far as the eye can see in unstable conditions such as we are experiencing today.

While the Obama administration’s financial planners wring their hands in public and say “We feel your pain” to debtors at large,

[terisan]

1. i am bothered by the piecemeal rollout of the big spending bills-it is deceptive advertising.

We swallow one massive debt, then the 2nd presentation comes and we are told we have to pass this too because it is designed to work with the previous indebtedness.

[agent46]

3. they played it the same way

They played it the same way with Bush's war spending. Seventeen billion here, thirty-two billion there. Etc. Etc. Signed sealed and delivered by a congress bought and payed for with the very same money.

[terisan]

2. Time for the Second American Revolution.