David Cay Johnston: Who Benefits From the Bailout?

[babylonsister]

Who Benefits From the Bailout?

David Cay Johnston, who won a Pulitzer Prize for his innovative coverage of our tax system, retired this year as a investigative reporter for The New York Times. He is the author of Free Lunch: How The Wealthiest Americans Enrich Themselves at Government Expenses (and Stick You with the Bill).



So just who stands to benefit if Congress agrees to borrow another $700 billion to address what the administration says is a financial crisis that threatens to bring back Hoovervilles?

Who will bear the burdens, and who will receive the benefits, of the proposed fast-track bailout of Wall Street firms, banks and others who got rich selling financial products that some of have warned for years were toxic?

The burdens will fall on the taxpayers, who, if some version of the bailout goes through, will take the risk that they might get some of their money back, but may see the entire $700 billion go poof--and be asked to pony up more.

If this goes badly we will be paying $35 billion a year in additional interest basically for the rest of all of our lives, money we will not have for investing in the future through education, research and fixing up our rotting infrastructure.

And who will benefit? The market knows.

Just look at what happened to shares of Goldman Sachs, the country's biggest investment bank and a major player in creating, selling, and dumping onto the less sophisticated the opaque financial products that are so toxic that the president says economic Armageddon is almost here.

Two weeks ago today, shares of Goldman Sachs traded as high as $161.77. But when the markets opened on Monday the volume of shares sold exploded and the price started dropping. By Thursday of last week they fell as low as $85.88, losing nearly half their value in a week.

What was even scarier was that the volume of shares traded was exploding, with more than seven times as many shares traded last Thursday as just six days before. The smart money was dumping Goldman faster than Superman can fly away from kryptonite.

Today, Goldman is trading as high as $137.99 a share.

more...

http://blogs.tnr.com/tnr/blogs/the_plank/archive/2008/09/26/who-benefits-from-the-bailout.aspx

[mojowork_n]

1. Thanks for posting this. Besides "Free Lunch" he also wrote "Perfectly Legal"

...an examination of the tax structure in this country, and how *it* also benefits the wealthiest Americans.

If there's anyone's input I want on the bailout proposals, it's his.

I have no idea why my hometown newspaper, or the major TV cable news channels, or any other source of public information hasn't been beating a path to that man's door, to find out what he thinks is going on.

...Oh, wait... I bought my 3 copies of "Perfectly Legal" on Amazon, for $0.01. A penny.

Somebody bought up all the copies of his book that were out there, and then just dumped them...


...for a penny.

I had to pay the shipping costs, but it was one of the more enlightening books I've read on economic policy in the United States.