Real Reasons for Big Bailouts

By Roger Hedgecock

George Bush let Treasury Secretary Paulson talk him into believing that he had to destroy capitalism in order to save it. The plan was to borrow massively against future American generations' paychecks to solve problems caused by previous massive borrowing. Last fall's $700 billion TARP bailout (assembled secretly in panic by Ted Geithner and others) was sold as crucial to save the economy from a cascade of bank failures and the elimination of credit. The original idea was to back up debt securities that were failing because of the real estate bust - debt securities that were largely owned by foreigners with a big chunk owned by the Chinese. The panic was caused by the thoroughly predictable inability of over-leveraged homeowners to pay "liar loan" mortgages that had been obtained using phony appraisals. [more...]