With the credit crisis continuing to worsen, the US federal government is pledging a seemingly endless amount of money to shore up failing institutions hit hard by toxic assets. Federal government pledges now top $8 trillion with the most recent $800 billion announced Tuesday. The Real News Network spoke to journalist and author Nomi Prins.
BioNomi Prins is a journalist and Senior Fellow at Demos. She writes about politics, money and relationships. Nomi is the author of Other People’s Money: The Corporate Mugging of America and Jacked: How "Conservatives" are Picking your Pocket . Before becoming a journalist, Nomi worked on Wall Street as a managing director at Goldman Sachs, and running the international analytics group at Bear Stearns in London. Comments from Registered Members | (Register or log in to make your comment.) | mycall8 2008-11-30
Audacious, The "Fed" doesn't need to disclose it's assets? It is high time to stop the whole money from nothing at interest system. Most people don't know the "fed" is not federal and it's reserves are nil. So why do we continue to pay them to create our money? ask Lincoln & JFK | bickelj 2008-11-29
Nomi mentions the Treasury printing money. I suppose she means printing securities and selling them to the Federal Reserve who creates the money. Also it is the Federal Reserve who, when buying this unknown collateral, is drafting checks out of nothing. | Gabriel White 2008-11-26
I suspect that TRNN focuses on US dominance partly because it wishes to attract a US donations. How expensive a global network would cost would depend on the approach taken and where it was based. A skype-based system could be established relatively cheaply. I imagine the the US must be an extremely expensive society to base one's operations in. I fully understand the points you both make though and I have merely made this comment both to stimulate discussion about TRNN as a paradigm. To my mind, simply critiquing power, though admirable, does not in itself constitute independent journalism or a diversity of perspectives. Thanks for responding. | ANZAC68 2008-11-26
Carrying on Gabriels discussion, much of the criticism directed at the USA from those of us outside it, comes from concern of the global impact the US has given the levels of ignorance there. The sooner a (any) news broadcaster available to the US public provides a more generic view of world news the better for all concerned. The question remains however, will a US public brought up on a previously insular or US – centric diet of news, be prepared to swallow it.
Secondly and relating to the main news article, given the current deep hole the US economy finds itself in now and a FED busy printing off another few trillion dollars (backed by what exactly?), I can’t help myself think of a famous Simpsons line…’dig up, stupid, DIG UP…! ‘.
| pglavin 2008-11-26
Gabriel: the sort of global coverage you are asking for costs money - lots of money. With its limited budget, I think TRNN is justified in prioritizing American coverage at this point in time. However, I too would like to see its coverage to expand - hopefully with increased donations, this will happen. | Gabriel White 2008-11-26
Re Phyllis Bennis endorsement: "American driven news". Erm.. practice what you preach TRNN! By far the majority of your stories concern US history, influence and policy. This is informative for a non-US viewer by the way! Before I discovered TRNN I knew next to nothing about US the mechanics of politics. But I remember a commentator on this network from Pakistan once making the point that Pakistan's main interest was Pakistan and not US policy towards Pakistan. Sure, America is perhaps the prime villain in today's world, but if TRNN's aim is to offer a new global perspective it really needs to start developing a network of corespondents who don't feel pressured to relate everything back to the all too obvious theme of US hegemony. How about a a bit more from inside Russia, China, India, Africa, South East Asia etc? Even your coverage of Latin America, upon which I rely, is repetitious. Why not challenge CNN, BBC and Aljazera and not just the US "corporate media"? Is it that don |
Why I support the REAL News (a short message from a supporter)PHYLLIS BENNIS, FELLOW, INSTITUTE FOR POLICY STUDIES: What we see in the United States is American-driven news that's shaped around American foreign policy and takes the vantage point of US interests at its core. What we really need is a real, independent, international media outlet.Bailout costs $8.5 trillionProducer: Carlo BasiloneCARLO BASILONE, TRNN: The US government announced another $800 billion injection on Tuesday in the hopes of bolstering the frozen credit markets and the devastated housing markets. Treasury Secretary Henry Paulson announced $200 billion to unfreeze credit for various types of consumer debt. As well, the Federal Reserve will provide $600 billion in funding for new mortgages to help stimulate the US housing market. These recent pledges by the federal government are in addition to the $7.76 trillion already pledged, as tallied in a recent Bloomberg report. The breakdown does include Monday's $306 billion for Citigroup's bad assets. It also goes back to last March, when the government committed $29 billion to entice JPMorgan Chase to take over the failing Bear Stearns, as well as the more than $150 billion to AIG. The controversial $700 billion Wall Street bailout for the Troubled Asset Relief Program, or TARP, that was passed by Congress in early October is also part of the Bloomberg calculation, though it's not even 10 percent of the total. According to the Bloomberg report, the FDIC has pledged $1.4 trillion in bank-to-bank loan guarantees. The government also pledged $2.4 trillion to buy up so-called short-term notes, or commercial paper, which are unsecured promissory notes, or IOUs, from banks and corporations. And, finally, $2.3 trillion in something called the Commercial Paper Funding Facility and Money Market Investor Funding Facility. The $800 billion announced Tuesday and the $7.76 trillion from the Bloomberg estimate add up to $8.56 trillion, or $26,500 for every man, woman, and child in the United States. We spoke to journalist and author Nomi Prins about where these trillions might come from.NOMI PRINS, AUTHOR: Well, that's the now-many-trillions-of-dollars-worth question. It's coming from two sources, both of which ultimately get back to us, the taxpayer. The first source is the Fed works as a kind of lender of last resort. That is part of their job. And when they lend money to financial institutions, they have taken collateral in return, which used to be US Treasury bonds. What we have now and what has been created over the last year, and particularly in high volume in the last few months, is the collateral that the Fed has on its books has changed from secure Treasury bonds to who knows what junky types of mortgage and subprime-backed collateral. Now, we don't know exactly what it is, because they don't have to disclose exactly what it is. This means that they have collateral that they might not necessarily be getting interest payments on. So they're not giving those to the Treasury Department, meaning there is a shortfall of money coming into the Treasury Department, meaning the Treasury will have to print more money or, basically, increase our debt, raise more money in the form of Treasury bonds, in order to fund not just everything else the Treasury has been doing in this bailout, but also the shortfall that is coming from the Fed changing their method of receiving collateral from the banking system.BASILONE: Because the Federal Reserve is not disclosing what types of bonds they are using for collateral, Bloomberg has taken the unprecedented move of suing the Fed under the Freedom of Information Act to force disclosure.PRINS: All of that comes back to us, because if more debt needs to be raised, that means that the US as a country, if it wants to stay solvent with respect to other nations who also own our debt, have to make those interest payments. The more debt we have, the more interest payments we have to make, and, therefore, the more money comes off of the federal budget before anything else happens. Already it's the third largest line item in the budget, the interest on our debt. It will become bigger, and it is necessary to pay in order to maintain our national solvency. In the end, even though the numbers are really astronomical and in the trillions to date, the simple infusions of capital or lending of it in return for toxic acid will not in itself work, unless it's done to the amount of potential loss that is in the system, which we're all unclear on, because a lot of the leverage on a lot of these assets was not fully disclosed and is not, still, transparent and is not, still, being announced by the various financial institutions. They're still holding onto this knowledge. And so, until that is gone, although this is a tremendous sum of money and it will have ramifications for years in terms of the national debt and what doesn't get used to finance other federal budget items, it is, unfortunately, not really going to fix anything until the losses are all shaken out of the system, and we're just not there yet.DISCLAIMER:Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy. |
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