trickle-down theory: the economic-political argument that the increases in the earnings of the rich are good for the poor because some of those additional earnings will benefit the middle class and the poor through increased spending, investment, and job creation.
You remember the trickle-down theory that is forever associated with Reagan, don't you? It was only about 18 months ago that the NY Times declared trickle-down theory to be discredited and unable to work in the real world. The article was a devastating indictment to the supply-side crowd.
Yet the moment that Wall Street gets into trouble the economists, the media, and the politicians immediately start robbing the poor and giving to the rich.
“Rich people got it good in this country. We refuse to let them not be rich. Think about it. Broke people are about to bailout rich people. This is what is going on.”
- Wanda Sykes
If you were one of the few that actually supported the idea of bailing out Wall Street, did you ever wonder who exactly it was that you were bailing out?
The average income of Wall Streeters last year was about $280,000, or nearly five times as high as the average of all other workers in the city.
And that's just the people who will be handling the bailout. What about the people that are invested in the companies that are going to be bailed out?
“If Wall Street gets away with this, it will represent an historic swindle of the American public - all sugar for the villains, lasting pain and damage for the victims.”
- William Greider
And did you ever wonder just how large the bailout is going to be? How about $3 Trillion and counting.
We learned yesterday that the size of the bailout just tripled, from $750b to $3T. Here is the cost structure:
• $250 billion of capital into banks;
• Guarantee $1.5 trillion in new senior debt issued by banks;
• Insure $500 billion in deposits in noninterest-bearing accounts (primarily businesses accts).
All that money has to come from somewhere. That somewhere will be your kids' future earnings. The deficit for next year is likely to be $2 Trillion.
Where is all that capital going to come from in a country with no savings?
We could borrow from foreigners, right? Our Asian creditors do have massive currency reserves, but those currency reserves are already invested in our dollar-based debt. If they sell our corporate debt or equities to buy our treasuries then we simply move the problem from one place to another.
Besides, foreigners are also engaging in massive bailouts to save their own economies from what the IMF just called a "global meltdown", so they are going to need what savings they have.
So what are they going to do to "pay" for this bailout? They are going to print money out of thin air, and that means inflation. Our foreign creditors know this to be true. That is why they are now uniting behind the call for a new worldwide financial system that isn't based around the dollar. The post-WWII world is finally about to end.
I understand that some poor souls out there are worried about the value of their 401k, and that's why they backed the Wall Street bailout. Nevertheless, they were fools.
First of all, the 2,300 point drop in the DOW just since the bailout passed should now make them understand that the bailout was never meant to save their tiny 401k. It was meant to save Da Boyz who control Wall Street (and Washington).
Under the bailout plan for the nation’s banks unveiled on Tuesday, no heads will roll, as they did in the United Kingdom. No banking executives are likely to go hungry, either...
Compensation experts say that the provisions, though politically prudent to appease public anger, will probably have little real impact on how financial executives are paid in coming years.
And if you were foolish enough to believe that this bailout was supposed to help the housing market then you'll be surprised to know that mortgage rates spiked higher at the fastest rate in 21 years.
Secondly, I refer back to the topic above: trickle-down economics doesn't work! The money given to the rich in this bailout isn't going to filter down to you.
Finally, and most importantly, the bailout is beyond traditional trickle-down economics. It's more like theft by class warfare.
The overwhelming percentage of the capital to pay for this bailout will be from the working class. The benefits will be enjoyed almost exclusively by the rich. This is a massive transfer of wealth to the richest in America, and the reason for it is because their insatiable greed made them incompetent.
These greedy bastards should be hanging from lampposts! Not be getting bailed out!
What is wrong with the people of this country? Turn off the idiot box and take a look around. Your country is being stolen out from under you! And it isn't just you, it's your children's future they are stealing as well.
This isn't hard to understand. Your hard-earned tax money is going to bail out people who wouldn't spit on you if you were on fire. This is the same group of people who successfully lobbied to make sure that you didn't get universal health care because it was "too expensive". These are the same people who pushed through the 2005 Bankruptcy Bill in the middle of the night, so that you would still lose your home when you went broke.
So get angry! Get upset. Rant and rave to your family, your friends, your neighbors, and strangers on the street.
When that no longer satisfies you, then start organizing. Because nothing will ever change unless we organize first.