Nationalizing Banks, Auto and Insurance

By Bill Glynn

We the People have a new broker: The U.S. Government. On our behalf, the government has what is called in the brokerage world a discretionary account. This means as a broker, it has the discretion to invest and lend on our behalf without our input. So what are we investing in? Let's start with $1 trillion in our brokerage account. The government is lending most of that money to various companies: banks, brokerages, automotive and insurance companies like AIG. This is equivalent to having secured interest in the companies and the hope the loans will be paid back with no guarantee. Although secured by the assets of the companies, the government is taking into account the risk of the loans and charging a very high interest rate. The higher interest rates are expected because it is equivalent to buying junk bonds. So our portfolio is growing with predominately very high-risk assets almost like a venture capital or venture lending company. [more...]