I just read this analysis by Michael Hudson, a former Wall Street economist. It’s worth reading.

I love it when America, currently run by Republicans, the ones who keep demanding the rest of the world stop propping up their industries and embrace “free market economics” if they want to become part of the WTO, the same America that equates socialism with pure evil, spends hundreds of billions of dollars of taxpayer’s money bailing out a publicly-listed company. Will those taxpayers end up shareholders in the respective companies? No. The money is going into a black hole, to pay the exorbitant salaries of the same greedy fat executives (like the CEO of Freddie Mac who got $20 million last year) who ran the companies into the ground in the first place. And the ones who ran the companies while they lied about the balance sheet don’t even go to jail.

When I talk with American friends about the bailout, they say the same thing – “it’s the best thing for the economy”. I always ask the same question – “why?”. And then they go… “ummm…..”. They don’t know the answer. They are just regurgitating what they’ve been told by the elite media.

Of course, if another country, say Venezuela, wanted to prop up one of it’s industries for “the good of the economy”, the US State Dept would declare them evil commies and threaten them with economic or military intervention. But oh, it’s okay when it happens in the US o’ A.

Hudson doesn’t agree that it’s the best thing for the economy. He says it’s the best thing for the big fish:

The looming defaults threaten financial institutions holding mortgages on such properties, moving up the economic pyramid to reach investors and creditors at the top. Somebody must take a loss. But who? Big fish or little fish?

Of course, the elites at the top want protection of their investments. They don’t care if $100 or $200 billion of little fish’s money disappears in the process. The people get screwed again and they smile while it’s happening.

Hudson, in his conclusion, says:

America’s $13 trillion in domestic real estate debt is no more payable than is the government’s $3.5 billion dollar debt to foreign central banks, or the public debt itself for that matter. Adam Smith remarked over two centuries ago that no government ever had repaid its debts. At that time the aristocracy – the heirs of the Viking warlords who conquered Britain and other European countries and turned their common lands into private property – held most of the land free and clear. Today, real estate has been “democratized,” but this has been done on credit. Mortgages are the major debts of most American families. In this role, real estate debt has become the basis for the commercial banking system, and hence the basis for the wealthiest 10 percent of the population who hold the bottom 90 percent in debt. That is what Fannie Mae, Freddie Mac and “the market” are all about.