Banks Have Been Set Afloat But Foreclosures and Unemployment Continue to Drown Ordinary Americans
Ben Bernanke has been the chairperson of the Federal Reserve when Bush ruled and now he continues under Obama
. Treasury Secretary of the Bush period was replaced by Tim Geithner. All three have been harping on the same theme that if the banks were allowed to sink so too would the economy. Thus they rescued the banks not to help the financial bodies but to help the economy; so they said. Millions were pumped into the banks, trillions of subsidies were created and countless swaps took place. Interest rate has been kept down at nearly zero to give a boost to the balance sheet of the banks and ward of the financial fall.
To some extent the strategy worked. The banks have returned with vigour raking in profits and poised to dole out extravagant bonuses to their executives. The amount crosses $10 million. But re-floating the banking yachts did not create the expected tide. Rather the ordinary American continues to drown with the weight of unemployment, foreclosures and bankruptcies. In all these sectors records are being broken. Despite the platitudes voiced by the economists Americans are no better rather they are going down and down.
The economy cannot surge without a financial system that works. But if the Americans benefit the banks cannot rake in one-time profits. Banks are now borrowing from the Federal Reserve practically without paying any interest and purchasing overseas stocks. They are investing abroad in growing regions of China and other places. They are profiting by betting on minute stock and bond movements that has no connection with assisting the small business enterprises who need help.
Thus the profit making spree of the banks is not helping the economy of the nation. Small business concerns continue to be neglected and are not getting loans. The banks are shying away from rewriting of mortgages resulting in increase of foreclosures. Wall Street is prospering but the country is not.
This will lead to a hot debate in the Congress about reform of the financial system a debate with great potential importance for the nation. Mere reform however will not tide over the problem. The people have to be given work. Unless there are customers business houses will not hire employees. Unless tax revenue rolls in the local administration will not stop laying off workers.
The financial chaos has cost ordinary Americans trillions in dollars. Consumers have not regained confidence and are unwilling to spend even if they have dollars in their pockets. None but the fortunes of the banks have changed.
Banks Have Been Set Afloat But Foreclosures and Unemployment Continue to Drown Ordinary Americans