Bear Stearns, JP Morgan, Federal Reserve. You’ve heard about them in the news this week. It sounds very confusing what happened. The TV network execs are unwilling to explain it – leaving their dim-witted TV anchors (pretty girls of mixed heritage) left reading teleprompters full of nonsense.
Well, let me break it down for you; because it’s pretty simple and you just got fucked.
Bear Stearns (hereafter: BS), a Wall-Street investment bank, got what was coming to it. BS found itself eating shit because it had heavily invested in subprime mortgages that were rapidly becoming worthless. Good. That was a big scam to begin with and all those lenders should go out of business for risky investment and luring poor people into loans they couldn’t pay. So, BS does terrible these past 8-9 months. All its investors get scared (rightly so) and pull out – leaving BS fucked.
In steps JP Morgan and the Federal Reserve.
The Federal Reserve tells JP Morgan that, if JP Morgan takes over BS, the Fed will cover it’s loses up to 30 billion dollars. TRANSLATION: JP Morgan can acquire a huge company with no risk whatsoever, with any costs being paid by YOU. Yes, YOU. The Federal Reserve will print $30billion to cover that deal. By doing so, they devalue your money by $30 billion dollars.
Of course, the Fed “lends” the money to JP Morgan – at 2.5% interest. For those keeping score, that’s below inflation, which is about 4% (nice work, JP).
Why did the Federal Reserve, the backer of your currency, bail out BS and help JP make several billion dollars? Because the Federal Reserve is just a bunch of Wall Street bankers. They aren’t “federal.” It’s a private bank and they are helping their own cause – banking.
If the federal reserve didn’t step in, then BS would have gone bankrupt. What’s the problem there? Well, despite MASSIVE losses in 2007, BS paid out over $4 billion in bonuses earlier this year. If they went bankrupt, then all those employees would have had to repay those bonuses (as per the new law*). To sum, the fed devalued your money to save the bank accounts of over 14,000 employees who made a business out of cheating poor people for home loans. And those fucking assholes at BS have the fucking nerve to complain about the offer. The average salary at the company for 2007 was over $242,000.
Next time someone complains about welfare, ask them about the time the US citizenry gave $30 billion dollars to the employees at an unethical company who paid themselves over $4 billion in bonuses despite record losses.
Analogy: Bear Stearns scams a Nolan Ryan rookie card from some kid (American citizens). He’s about to get busted for it and panics. JP Morgan says he will buy the valuable card from Bear Stearns, but only for a fraction of its value and only if the Federal Reserve pays for it. Bear Stearns walks away scot free, JP Morgan got a great card for nothing, and the Federal Reserve paid for it all with money it stole from the same kid who owned the card to begin with. Then they all go on TV and say how important this was to protecting the balance of things.
Ben Bernanke should be executed.
*Bankruptcy Abuse Prevention and Consumer Protection Act
“The law improves the ability of the bankruptcy estate to reclaim assets placed in asset protection trusts within ten years of filing or paid as employment bonuses to insiders within two years prior to filing.”