Elitists Want You to Re-Inflate the Bubble

Earthside Comments: The Washington and Wall Street elitists are desperately trying to re-inflate the bubble.

Borrowing and debt created this economic crisis ... but Obama, Geithner, Bernanke and the CEOs of all the insolvent banks want you to please do it all over again.

Once again this highlights our major disagreement with the Bush-Obama-Paulson-Geithner-Bernanke goals for the economy: they want to recreate 1998 when everyone borrowed and spent to their heart's content without regard to consequences. We believe now is the most opportune time to reform and revolutionize the economy into one of sustainability, responsible production, conservation, saving, decentralization, competition, de-globalization ... indeed, that is going to be the only way ultimately that we will have any kind of survivable future.

Fed Launches Program to Boost Consumer Credit | Associated Press/MSNBC.com

The government launched a much-awaited program Tuesday to spur lending for autos, education, credit cards and other consumer loans by providing up to $200 billion in financing to investors to buy up the debt.

If the program succeeds, it should help bust through the credit clogs in place since last year and make it easier for Americans to finance large and small purchases at lower rates, Federal Reserve Chairman Ben Bernanke told Congress. That, in turn, would help revive the economy, he said.

Created by the Fed and the Treasury Department, the program has the potential to generate up to $1 trillion of lending for businesses and households, the government said. It will be expanded to include commercial real estate, though that won’t be part of the initial rollout. ...

... Under the program, the Fed will buy securities backed by different types of debt, including credit card, auto, student and small business loans. The credit crunch — the worst since the 1930s — has made it much harder for people to obtain such financing , and those that do can be socked with high rates.

Before the financial crisis, banks relied on packaging such loans into securities and selling them to pay for additional lending. That process had financed about 25 percent of consumer loans in recent years until the credit markets ground to a halt in October, the government said.

Anil Kashyap, a professor at the University of Chicago’s Booth School of Business, said the program should make it easier for consumers to get loans. But he cautioned that the Fed’s involvement in this area could have unintended consequences elsewhere by making other debt securities not backed by the government less attractive to investors.

“We’d really rather the credit markets just work properly,” Kashyap said.

Bernanke Says U.S. May Need to Expand Bank Rescue | Bloomberg.com

Federal Reserve Chairman Ben S. Bernanke said policy makers may need to expand aid to the banking system beyond the $700 billion already approved and take other aggressive measures even at the cost of soaring fiscal deficits.

“Without a reasonable degree of financial stability, a sustainable recovery will not occur,” the Fed chairman said today in testimony prepared for the Senate Budget Committee. “Although progress has been made on the financial front since last fall, more needs to be done.”

Bernanke’s comments suggest he sees a role for bigger federal outlays as the Obama administration seeks congressional approval for a budget of $3.55 trillion for the fiscal year beginning in October. President Barack Obama has already signed into a law a $787 billion economic stimulus package of tax cuts and government spending. ... MORE