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Friday, September 18, 2009

The Greatest Story Never Told

The title may be a bit much, but it has a nice Friday morning punch to it. In response to my post on the decline in household and business debt (and spike in federal debt), reader mab details:

Look at the Flow of Funds net lending and net borrowing. As your chart shows, absent the Government, borrowing was hugely negative. But even more telling is that absent the Fed, lending was negative by over a TRILLION!
And here is a chart of that net lending...

And while I would love to rant about this, I couldn't do a better job than mab.
The TARP was used to fill huge black holes in bank balance sheets - we new that going in. But the notion that banks would ever use the money to lend to tapped out households or to small businesses was a ruse. What's worse, now there is even less incentive for banks/creditors to restructure mortgage debts.

I'd like to know how much of the TARP and AIG pass through bailouts are being used to speculate on existing paper assets. If people only understood the size and scope of this historic rif-off.

The biggest swindle in history. The greatest story never told.
Source: Federal Reserve