Misleading Rhetoric On Bailouts
We hear lots of talk about the bailouts by both political parties.* The political right runs misleading ads about "failed policies" to discredit the loans given to the financial and auto segments of the economy under both George W. Bush, a name long since forgotten by the right wing of the country (they hope voters will forget that name too), and by Barack Obama, whom the right wing has blamed for everything, except perhaps the bombing of Pearl Harbor, although don't rule that out, since his birth certificate is from Hawaii, thus establishing a link to the American naval base bombed in December 1941, long before Obama was born, but such "details" never seem to stop the right wing attack machine.**
Deciphering all of this information can be tricky, but here is the best I can come up with. In 2008, Congress authorized and President Bush signed a law providing $700 billion (with a "b") in funds to help stabilize the financial industry; namely banks, and more precisely, many big banks which had gotten themselves into trouble by bundling risky mortgages together and using them to back securities. Now, the entire $700 billion was NEVER dispersed (about $600 billion was dispersed); something I believe is generally unknown to most Americans, since the political ads are run to scare the hell out of you, or get (or keep) you angry, not to truly inform you. Most of the dispersed money was allocated on some sort of "loan" basis; that is, it is expected to be paid back, and to earn interest or other compensation, while a much smaller amount (seemingly $5-6 billion, but certainly less then $10 billion) was more or less given as grants to certain entities; the plain English translation of which means, "It's gone!" Now, a fairly large chunk (about 55%) of the dispersed money has been PAID BACK, again, something NEVER mentioned in ads. Further, Uncle Sam has earned something on the order of $85 billion in compensation for the loans, primarily interest or dividends.*** The largest unpaid amounts from the general "financial" sector are owed by Freddie Mac and Fannie Mae (both part of the mortgage industry) and by insurance company AIG, which had lots of investments in bad securities. The auto industry bailout dispersed slightly under $80 billion, of which something like $29 billion is still owed, from what I can tell. Please understand, these numbers can change quickly, as Uncle Sam can sell stock or receive payments or dividends at any time.
In researching this information, it is sometimes difficult to tell what is really still owed, or perhaps more specifically what is expected to be paid back, according to each specific case, since Uncle Sam receives interest and dividends (as I already mentioned) and received stock or other securities in many companies, some of which were then sold by Uncle Sam, thus bringing in more money, and "apparently" reducing the amounts owed, at least in "some" cases. What do I mean? Well "Randy Inc." borrows $100,000 from you and owes you $10,000 in interest, and you get 1000 shares of the company, just to keep the numbers fairly easy. I pay you $2000 in interest payments and you get $1000 in dividends from the stock. Now, does "Randy Inc." still owe you $100,000, or $97,000? I didn't research each "deal," as the sheer magnitude of such research would be prohibitive. Further, let's say "Randy Inc." is doing better since your cash infusion, the stock rises and you sell 500 shares, earning say, $10,000. Does that "$10,000" cover part of the loan, or not? Likely it would. What the end result will be is still to be seen, but the absolute hysteria by the political right about the bailouts, especially AFTER Obama took office, that he was trying to take over the country, was absolute NONSENSE!
* Democrats, especially, tout the money used to help both General Motors and Chrysler survive, although in their case, they either conveniently forget the Bush administration's initial involvement, or mention it quickly, as if to kill the pain. With the bank bailouts, Democrats are much quicker to mention Bush as the main advocate (which is true), as the bank bailouts have proven to be a much hotter potato, fairly or unfairly. When will either party, when appropriate, get back to sharing credit for successes, and taking joint blame for failures? The answer lies with us, for as long as so many Americans get their "news" from politically slanted cable shows, masquerading, or at least perceived by many Americans, as news programs, and from thirty second ads presenting purely one side or the other's case on a given issue, I don't see this ending. So bluntly, I DON'T see this ending. If you think such ads don't work, remember, companies wouldn't spend millions on telling you to buy their dish detergent or to buy their green beans, if their ads didn't work. We all sort of think we're too smart to be influenced by such ads, but we're being naive.
** The onerous "Citizens United" decision by the Supreme Court allows groups or individuals to spend as much as they want on political ads, without having to disclose who the donors to these ads are.
*** As best I can tell, that amount also includes the sale of some stock received by Uncle Sam in certain companies. The actual overall amount may be closer to $90 billion, but I put it at $85 billion, a figure I feel is more certain.
WORD HISTORY:
Pay-This word goes back to Indo European "pak/pag," which had the notion of "to fasten, to unite, to make stable." This gave its Latin offspring "pax," which meant "peace," from the idea of " 'uniting' involved parties in an agreement or 'pact.' ^ " This then produced Latin "pacere," a verb meaning "to pacify," and from that idea it then developed the further meaning "to settle or satisfy (often a debt)," and the original "peace" idea was still evident, as in "keep peace with a person to whom one owes something." Old French, a Latin based language, inherited a form of the word as "paier," and English borrowed the word in about 1300 as "payen," before the modern version, and the further idea of "something owed for work" also developed, as well as the noun form (from the verb) for such a payment; thus your "pay."
^ "Pact" comes from the same source, with the idea of "unifying sides in an agreement."
Deciphering all of this information can be tricky, but here is the best I can come up with. In 2008, Congress authorized and President Bush signed a law providing $700 billion (with a "b") in funds to help stabilize the financial industry; namely banks, and more precisely, many big banks which had gotten themselves into trouble by bundling risky mortgages together and using them to back securities. Now, the entire $700 billion was NEVER dispersed (about $600 billion was dispersed); something I believe is generally unknown to most Americans, since the political ads are run to scare the hell out of you, or get (or keep) you angry, not to truly inform you. Most of the dispersed money was allocated on some sort of "loan" basis; that is, it is expected to be paid back, and to earn interest or other compensation, while a much smaller amount (seemingly $5-6 billion, but certainly less then $10 billion) was more or less given as grants to certain entities; the plain English translation of which means, "It's gone!" Now, a fairly large chunk (about 55%) of the dispersed money has been PAID BACK, again, something NEVER mentioned in ads. Further, Uncle Sam has earned something on the order of $85 billion in compensation for the loans, primarily interest or dividends.*** The largest unpaid amounts from the general "financial" sector are owed by Freddie Mac and Fannie Mae (both part of the mortgage industry) and by insurance company AIG, which had lots of investments in bad securities. The auto industry bailout dispersed slightly under $80 billion, of which something like $29 billion is still owed, from what I can tell. Please understand, these numbers can change quickly, as Uncle Sam can sell stock or receive payments or dividends at any time.
In researching this information, it is sometimes difficult to tell what is really still owed, or perhaps more specifically what is expected to be paid back, according to each specific case, since Uncle Sam receives interest and dividends (as I already mentioned) and received stock or other securities in many companies, some of which were then sold by Uncle Sam, thus bringing in more money, and "apparently" reducing the amounts owed, at least in "some" cases. What do I mean? Well "Randy Inc." borrows $100,000 from you and owes you $10,000 in interest, and you get 1000 shares of the company, just to keep the numbers fairly easy. I pay you $2000 in interest payments and you get $1000 in dividends from the stock. Now, does "Randy Inc." still owe you $100,000, or $97,000? I didn't research each "deal," as the sheer magnitude of such research would be prohibitive. Further, let's say "Randy Inc." is doing better since your cash infusion, the stock rises and you sell 500 shares, earning say, $10,000. Does that "$10,000" cover part of the loan, or not? Likely it would. What the end result will be is still to be seen, but the absolute hysteria by the political right about the bailouts, especially AFTER Obama took office, that he was trying to take over the country, was absolute NONSENSE!
* Democrats, especially, tout the money used to help both General Motors and Chrysler survive, although in their case, they either conveniently forget the Bush administration's initial involvement, or mention it quickly, as if to kill the pain. With the bank bailouts, Democrats are much quicker to mention Bush as the main advocate (which is true), as the bank bailouts have proven to be a much hotter potato, fairly or unfairly. When will either party, when appropriate, get back to sharing credit for successes, and taking joint blame for failures? The answer lies with us, for as long as so many Americans get their "news" from politically slanted cable shows, masquerading, or at least perceived by many Americans, as news programs, and from thirty second ads presenting purely one side or the other's case on a given issue, I don't see this ending. So bluntly, I DON'T see this ending. If you think such ads don't work, remember, companies wouldn't spend millions on telling you to buy their dish detergent or to buy their green beans, if their ads didn't work. We all sort of think we're too smart to be influenced by such ads, but we're being naive.
** The onerous "Citizens United" decision by the Supreme Court allows groups or individuals to spend as much as they want on political ads, without having to disclose who the donors to these ads are.
*** As best I can tell, that amount also includes the sale of some stock received by Uncle Sam in certain companies. The actual overall amount may be closer to $90 billion, but I put it at $85 billion, a figure I feel is more certain.
WORD HISTORY:
Pay-This word goes back to Indo European "pak/pag," which had the notion of "to fasten, to unite, to make stable." This gave its Latin offspring "pax," which meant "peace," from the idea of " 'uniting' involved parties in an agreement or 'pact.' ^ " This then produced Latin "pacere," a verb meaning "to pacify," and from that idea it then developed the further meaning "to settle or satisfy (often a debt)," and the original "peace" idea was still evident, as in "keep peace with a person to whom one owes something." Old French, a Latin based language, inherited a form of the word as "paier," and English borrowed the word in about 1300 as "payen," before the modern version, and the further idea of "something owed for work" also developed, as well as the noun form (from the verb) for such a payment; thus your "pay."
^ "Pact" comes from the same source, with the idea of "unifying sides in an agreement."
Labels: auto industry, bailouts, bank bailouts, Barack Obama, conservatives, Democrats, English, etymology, French, George W. Bush, Latin, political ads, Republicans, right wingers
posted by Randy at 10:29 PM
1 Comments:
Im glad you do these kinds of posts. You give info that helps me understand some of this stuff. I know UR Dem, but your basic info is always fair. You hit Dems too sometimes.
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