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From Bloomberg today..

"U.S. Secretary Henry Paulson plans to use the second half of the $700 billion financial rescue program to help relieve pressures on consumer credit, scrapping an effort to buy devalued mortgage assets."Illiquidity in this sector is raising the cost and reducing the availability of car loans, student loans and credit cards'' Paulson said today in a speech at the Treasury in Washington. `"This is creating a heavy burden on the American people and reducing the number of jobs in our economy.'""

So scrapping an effort to buy worthless toxic junk didn't turn out to be such a brilliant plan after all. Is Paulson the last to realise that this was always going to be the case ? Surely he must have known; enough people told him well in advance. He knew it all right and proceeded to hand the money over to his pals in Goldman Sachs and J.P. Morgan et al. This was always the plan.

However, Paulson, along with the administration, have finally realised that more and more people are seeing through the TARP snake oil and are looking for someone, yes anyone, to actually tackle the problems of the real economy. Or so we would hope.

"Illiquidity in this sector is raising the cost and reducing the availability of car loans, student loans and credit card debt" snip and "is creating a heavy burden on the American people and reducing the number of jobs in the economy."

Hold the Front page already ! Paulson has just had his Eureka  moment and realises that without the suckers there is no game. The "Heavy burden" on the American people and people from all over the planet has been placed there by Paulson, and his Wall St buddies ever since they figured out that money was not to be earned but to be invented out of thin air. Illiquidity in this sector was well established but  he still handed out hard earned U.S. taxpayer cash for this worthless waste that was running down Wall St..

It's not just the "illiquidity" that is raising the cost and availability of car loans and credit card debt, it is the fact that unemployment is on the rampage along with the wholesale sinking of Industry and the real estate scam. The victims are seen queuing for a bowl of soup, sleeping under a bridge, fastening down the tent at night, pleading with Mortgage lenders to give them a break or just leaving the country,.
The members of the currently employed are hunkering down and getting ready for the worst. The last thing on their minds is a new car or another giant plasma TV. People are beginning to see the light at the end of a tunnel and it's not what they were expecting.

So those responsible for getting the Economy out of the mess are still trying to sell their victims even more debt. What about giving them back their money so they can keep their house ? What about reducing their tax burden so they can maybe start a small company ? What about TELLING lending institutions that he has given taxpayer money to, to cut their debtors a break ? Oh , I forgot about the Help program courtesy of Fannie Mae and Freddy Mac. These guys are so desperate to show the Chinese that they are actually doing something before the G20 summit, to save their own and the Chinese investors' behinds, that they have proposed to reduce monthly payments for people who are 90 days delinquent on their payments. This will only keep the lid on the mortgage backed securities market for a little longer. The reason most of these homeowners are delinquent on their house repayments is bacause they have either lost their job, have had their working hours reduced, have credit card debt spiral out of control as lenders increase the repayment interest or have been coping with the loss of equity on their property, upon which, they took out loans already. The equity is not going to increase, it will decrease. The date of foreclosure is just being delayed and the vultures will swoop in to fight over what's left. The problem cannot be fixed by reducing the mortgage repayments, the delinquency on which is only a symptom. Ignoring the fundamental causes of the problem will only exacerbate it. This has been the case ever since the first rumblings of the crisis and continues to be the modus operandum of the Financial Aristocracy.

In his remarks today, Paulson said that the Bush administration `"has taken the necessary steps to prevent a broad systemic event.'"

The irony is lost on poor Henry.

 



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