The Robert Rubin Plan to save banks has apparently been whittled down. We taxpayers have only saved two, maybe three investment banks, and the ex-Goldman honchos who surround Obama made sure their old bosses were at the top of the heap.
A new order is emerging on Wall Street after the worst crisis since the Great Depression — one in which just a couple of victors are starting to tower over the handful of financial titans that used to dominate the industry.
On Thursday, JPMorgan Chase became the latest big bank to announce stellar second-quarter earnings. Its $2.7 billion profit, after record gains for Goldman Sachs, underscores how the government’s effort to halt a collapse has also set the stage for a narrowing concentration of financial power.
“One theme here is that Goldman Sachs and JPMorgan really have emerged as the winners, as the last of the survivors,” said Robert Reich, a professor at the University of California, Berkeley, who was secretary of labor in the Clinton administration.
Both banks now stand astride post-bailout Wall Street, having benefited from billions of dollars in taxpayer support and cheap government financing to climb over banks that continue to struggle. They are capitalizing on the turmoil in financial markets and their rivals’ weakness to pull in billions in trading profits.
For the most part, the worst of the financial crisis seems to be over. Yet other large banks, including Citigroup and Bank of America, are still struggling to return to health.
Well, "struggling" may be a bit strong.
Bank of America joined other major banks in reporting better-than-expected second quarter income Friday, earning $2.42 billion even as losses from failed loans continued to rise.
The results, which included $713 million of dividend payments tied to a federal bailout, compared with profits after preferred dividends of $3.22 billion in the same three-month period a year ago.
Earnings per share, which reflected a much higher amount of shares outstanding, fell to 33 cents from 72 cents. That was well ahead of the 28 cents per share forecast of analysts surveyed by Thomson Reuters.
The results also reflected a $5.3 billion pretax gain from selling part of the bank's stake in China Construction Bank Corp. and a charge to bolster a federal deposit insurance fund.
Separately on Friday, Citigroup Inc. reported that it earned $3 billion after preferred dividends, or 49 cents per share. Analysts had predicted the New York-based bank would post a loss.
Not bad for banks that were supposedly on the edge of bankruptcy if not dissolution a few short months ago. Meanwhile, how's that trickle-down to the rest of us working? *ahem* Not so well....
Unemployment topped 10 percent in 15 states and the District of Columbia last month, according to federal data released Friday. The rate in Michigan surpassed 15 percent, the first time any state hit that mark since 1984.
The Federal Reserve this week projected that the national unemployment rate, currently at a 26-year high of 9.5 percent, will pass 10 percent by the end of the year. Most Fed policymakers said it could take "five or six years" for the economy and the labor market to get back on a path of long-term health. To get there, consumers must return to a regular spending groove and housing prices need to start rising again.
(emphasis added)
Anybody here think it would take "5 or 6 years" to get people spending again if the stimulus money had gone directly into job creation instead of being funneled through Goldman Sachs so they could be Top Dawg? No, me neither.
We've been run through a wringer. I don't understand why the people who insist that we have to give Obama's economic plan "time to work" haven't grasped the simple fact that it is working. It is helping precisely who it was supposed to help, who it was intended to help.
Investment bankers.
What would have happened if a $$$Trillion$$$ had been put into job creation instead of banks? A lot more people would have jobs, jobs would give them money to spend and they'd be - believe me - spending it. Even the conservative Fed agrees in an offhand way as if to say "of course, we've known that all along" that that's the only way to get us out of this mess. Well, if they knew it all along, why didn't they target the stim pack that way and let it trickle down to the bankers for 5 or 6 years as the money moved through our hands and into the housing and retail markets?
You don't have to respond. We all know the answer. We've been had.
History will not be kind to this "Dumbest Generation." To date, we've given out $11.5T in stimulus, despite all of the "free-market" hoopla of the last two decades. The only way a citizen can obtain any of this stimulus is by helping a bank profit via the $8k tax credit or a mortgage reracks.
In fact, the game is rigged against Joe Public on every level; employment, taxation, representation, retirement, and in the marketplace. Yet, as long as can there's enough juice to power the idiot box, all is well. In a mere 20 years, we've devolved from a democracy to a dildocracy.
Posted by: OSR | July 18, 2009 at 08:04 AM