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Wall Street Wins, Again: Bailouts in the Time of Coronavirus

Originally published at http://www.commondreams.org/views/2020/04/06/wall-street-wins-again-bailouts-time-coronavirus

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Just the headline brought this classic, You Win Again, by Hank Williams, to my mind:

$$$https://www.youtube.com/watch?v=ehmC6hVVdkM

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The plague is the economic system, not just a dangerous viral pandemic. No cure is in sight having manufactured a culture of ignorant, blind conformity to deceptive and irrational social memes. And so the wheel turns…

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For the past two decades Prins’ depth of experience working in the sausage factory and willingness to objectively evaluate it made her the most qualified potential treasury secretary or Fed Chairman, those qualifications have serially made her the target of criticism, LongGone’s comments herein being the most recent. DC politicians have ignored her and appointed yes men and yes women to key posts, including Treasury and the Fed posts.

I recall during November 2008 when Obama was announcing key appointments and he didn’t even consider Prins. From that point forward the Obama regime became characterized as Dubya’s third term. Obama’s second term became Dubya’s fourth term as Obama continued appointing yes men and women, including his 2011 Simpson/Bowles “catfood” commission.

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A great chunk of that 1200$ going to the working class will be used to buy COBRA insurance due to the fact those people lost their jobs and insurance coverage. They wont even have enough left to pay rent or utilities.

As to the Corporations what are they going to do with all that on hand Capital Mnuchin willing to dole out to them? The economy is in a downturn and the consumer tapped out. That means a whole lot of these Corporations will not be earning revenues off sales of things they might produce. There simply no incentive here to retain employees so they are going to use the money to game the system, stock buybacks, mergers and the like even as they lay people off.

Imagine you are Boeing. No one is buying your planes so there no revenue. The Government says “we will give you 10 billion dollars to stay in Business” There no one buying those planes so Boeing lays off staff and keeps the 10 billion dollars. They are not going to use the 10 billion to keep manufacturing planes as there no market.

Now had that money went to the US worker instead the economy could keep running as they are the ones that spend the money in their local communities.

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For most Murkins $1200 won’t even buy one month’s worth of COBRA.

When Boeing relocated headquarters from Seattle to Chicago in 2000 its primary line of business became finance. Aviation became nothing more than grease for the money machine.

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I was curious as to how COBRA worked down there so did some research. What an inane system yet on their website it sounds like it this great thing for Americans that the Government will take care of them.

A single person on average will pay 540 bucks to retain their insurance each and every month. So no income outside UI perhaps and savings and 540 bucks extra has to be spent on insurance? A person who is unemployed now sees their monthly expenses go up?Who the hell thought that a great idea?

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COBRA is not a gubmit program. COBRA is simply regulation requiring companies to offer extended medical insurance with no price controls.

Typically the base monthly premium is $1200 or more that covers the former employee, spouse and dependent kids. If you are single you still pay the $1200 or more.

To call this extortion is charitable.

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Agreed, forgot about "catfood commission

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Even if you can come up with the money, the program is full of fine print designed to kick you out.

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The “Business and Finance” section in the Wall Street Journal had an interesting little tidbit today [*ttps://www.wsj.com/articles/supply-chain-finance-is-new-risk-in-crisis-11585992601]. Of course, you can’t read it online without a paid subscription, but a housemate has it delivered daily, so I had a look today without having to pay more than it’s worth to me.

Anyway, the article is about “supply chain finance,” which is a little trick that enables businesses to extend terms on their accounts payable for up to six months, well beyond normal terms on the bills they receive (30-60 days, for example). To put it simply, these are short-term loans that do not have to be declared as debts in public financial reports. The article described it as equivalent to “taking out a personal loan to pay a credit card debt.” Hence, businesses can appear to be in possession of a better balance sheet than they actually possess.

This is hidden debt that falsifies the financial health status of companies, and it exploded as a standard practice after the Great Recession. Now, it’s blowing up because businesses are struggling to meet their terms. Hence, it’s being recast as “supply chain debt” (“supply chain finance” is a product to sell; “supply chain debt” is a risk to transfer). So, take a moment to just think back a little bit to the last time financiers and bankers got “creative” with financial instruments that went bust and required a bailout. Remember “sub-prime mortgage debt”? Same idea: lend money to people who may not be able to pay it back, then package that risk and play it at the Wall Street Casino. Then, when the music stops, the oligarch left standing has to go hat-in-hand to Washington D.C. to beg for and become the face of the inevitable bailout. The final bill will be paid by taxpayers, of course, not by the rich people who accrued it.

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Are you saying us dumb Americans don’t know how to handle complex facts? I really appreciate Naomi Prinz’s meticulous research and in fact am somewhat awed by it. Sorry but not all Americans are dumb or like being treated as if we don’t like the details. Why would someone (unless they were a troll) try to project a ‘we are too dumb to like so many facts’ view here on CD?

Oh I just checked and in answer to my own question I see that you only just joined a little more than two months ago. Gee what a surprise huh?

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The wizards of Wall Street cast spells at Congress and the White House so as to keep the money printing presses working to assure they can “look good” to suckers/no, I mean ‘investors’ that keep the market inflated, a sand castle waiting for a wave to sweep it away. The COVID-19 virus is the tsunami wave headed their way. Will the presses be able to keep up? How many average Americans drown? Will a complete collapse be in the wind blowing the wave? Stay tuned it’s sure to get juicy as a systemic failure plays out with millions of lives on the line. Nomi Prins knows what she is saying. I just paint metaphors & impressions.

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Here is more as to how US Corporations are being run. This pandemic is not the cause of their ills. They have been engaged in bad business practices for a long time. Exxon as example would run up debt and borrow more money so as to pay higher dividends and engage in stock buy backs. They could have had billions of Cash but hedge funds demand returns on investment and keeping cash on hand does not generate an ROI. So instead of using revenues to pay down debt, they used revenues to buyback stock and then borrow more money against inflated share values.

This is “running it like a business” in a world where they claim Government wasteful and private Companies are not.

~https://www.investmentwatchblog.com/the-oil-giant-drowning-in-debt/

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The issue was appreciation for her efforts to inform and educate. She is kind of amazing to me that she wades through this data with meticulous skill. My eyes glaze over and I have flashbacks about the need to take better notes. I appreciate her work on our behalf. You insinuate with snide comments and offer nothing but a cheap shot at her expense!

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I find great value in Prins’ Wall Street insider knowledge as much as I appreciate Wendel Potter’s insider knowledge of the medical insurance industrial complex.

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Their stimulus is a hand job

Ours is a taser

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Thanks, EdsNote, for your observation.

Your 3rd paragraph reminds me of the Steve Carell, Christian Bale, et al, movie, The Big Short (2015). It’s a very good presentation of the Wall Street scams of 2007-08, involving the US housing bubble. It’s a finance primer, for a layman like myself.

In a nutshell, the movie explains, “lend money to people who may not be able to pay it back, package it, and take it to the Wall Street Casino.” So it’s happening again, as you note.

“The final bill will be paid by the taxpayers, of course, not by the rich people who accrued it,” just as in 2008.

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An idea for limiting the help to big companies: Set a limit on how much a company can receive, regardless of its size. Make it high enough to help the largest small businesses, but not high enough to do much for big corporations.

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Her past or present wealth does not invalidate her insight, analysis, or prescriptions for the catastrophe we are facing. If anything, her Wall Street experience gives her more credibility than most of us will ever have on the issue.

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