Zombie Banks and Your Financial Future
People tend to forget all of the taxpayer money that has been spent to prop up “too big to fail” financial institutions. Some of those “forgetful” people include the jerks that still run these institutions, which others have referred to as “zombie banks.”
How long will it take before we see some semblance of robust free-market capitalism return, where the value of an asset is based on what bona fide market participants will pay for it, the cost to borrow money is based on a company’s fundamental financial strength rather than its ability to access a government safety net, and corporations are free to fail no matter what their size?
Let’s also remember that two of the largest money-sucking institutions still have their mouths firmly attached to government teats. Freddie Mac and Fannie Mae are billions in the red and counting. They played (and continue to play) a huge role in the slow bleed in the housing market.
Saving Freddie and Fannie has not helped, because the foreclosure rate is up 25% since August 2009 and is higher now than at any other time in this financial crisis. (Source)
This is death by thousands of foreclosures. At this rate, we will all be dead by the time the housing market finds a bottom and starts to recover. The government should rip the bandage off and get it over with.
Moving on to AIG – still pathetic while the Treasury tries to devise a taxpayer exit plan from the insurance business.
What else have these bailouts brought us? The highest U.S. poverty rate since 1994. (Source)
Weil suggests that the financial system will continue to be rigged as long as we tolerate leaders who are running a “bailout nation.”
It’s hard to argue against that, don’t you think? Does anyone believe that our government is driving this economy in the right direction? If so, show me some data.
BTW – this is not a Bush vs. Obama debate. They are both blameworthy.
Here is a link to Weil’s piece: Zombie Banks Have Us Right Where They Want Us