Nexus - 1603 - New Times Magazine-pages

Page Content (OCR)

The total of Bush administration bank bail-outs ($8.5 trillion) can be broken down into funds granted by the Federal Reserve, the Treasury, the Federal Deposit Insurance Corporation and the Federal Housing Authority. [he hand-outs to the financial institutions financed out of Treasury are government expenditures, to be met either through tax revenues or the emission of public debt instruments. [he disbursements under TARP are categorised by the Bureau of the Budget as part of "a mandatory pro- gram" under an Act of US Congress. The Treasury's lia- bility, which includes the controversial TARP, was esti- mated in November 2008 at $1.1 trillion... constitutes a budgetary outlay which inevitably must The total of Bush administration bank bail-outs ($8.5 be financed from within the structure of government _ trillion) can be broken down into funds granted by the revenues and expenditures. Federal Reserve, the Treasury, the Federal Deposit Unless all other categories of public expenditure Insurance Corporation and the Federal Housing including health, education and social services are —_ Authority. slashed, the various outlays under the bank bail-out [he hand-outs to the financial institutions financed will require running a massive budget deficit which in out of Treasury are government expenditures, to be turn will increase the US public debt. met either through tax revenues or the emission of America is the most indebted country on Earth. The _ public debt instruments. US (federal government) public debt is currently in the The disbursements under TARP are categorised by order of $14 trillion. This does not include mounting — the Bureau of the Budget as part of "a mandatory pro- public debts at the state and municipal levels. gram" under an Act of US Congress. The Treasury's lia- This US dollar denominated federal debt is com- __ bility, which includes the controversial TARP, was esti- posed of outstanding Treasury bills and government mated in November 2008 at $1.1 trillion... bonds. The public debt, also called "the national debt", is the amount of money owed Spiralling Public Debt by the federal government to holders s the Treasury in a position to of US debt instruments. finance this mounting budget deficit, US debt instruments are held by officially tagged at $1.75 billion, American residents as part of their through the emission of Treasury savings portfolios, by companies and bills and government bonds? financial institutions, by US govern- ‘Lal; The largest budget deficit in US history ment agencies, by foreign govern- In all likelihood, coupled with the lowest interest ments and individuals in foreign | this crisis is leading us | rates in US history: with the Fed's countries, but do not include inter- . sas “near zero" per cent discount rate, governmental debt obligations or to the privatisation the markets for US dollar denominat- debt held in the Social Security Trust of the State, where ed government bonds and Treasury Fund. ong 2 bills are in a straitjacket. Moreover, Types of securities held by the pub- activities hitherto the essential functions of savings lic include, but are not limited under government (which are central to the func- to, Treasury bills, notes, bonds, q8 Rng g tioning of a national economy) TIPS [Treasury inflation-protect- jurisdiction will be are in crisis. screluvescisss Tl transferred into iM, "overistemein User Government Series [SLGS] secu- private hands. demand for Treasury bills at rities. The proposed _ solution becomes the cause of the crisis. The $700 billion bail-out under the TARP, combined with the proposed Obama $750 billion aid to the financial services mammoth budget deficit industry, is but the tip of the ice- through public debt operations, berg. A panoply of bail-out allocations, in addition to eading the entire budgetary process into a quandary. exceedingly low interest rates? The market for US dollar denominated debt instruments is potentially at a standstill, which means that the Treasury lacks the ability to finance its he $700 billion, has been decided upon. The question is whether China and Japan will contin- ue to purchase dollar denominated debt instruments. The Bush "Bank Bail-out" Washington is running a public relations campaign to The government's bank rescue program under the ure Asian investors into buying T-bills and US govern- Bush administration was estimated at a staggering ment bonds. $8.5 trillion, an amount equivalent to 60 per cent of With the markets for US dollar denominated debt in he total gross federal debt of $14.078 trillion (2010). crisis both domestically and internationally, further [his amount does not include the "aid" to financial pressure will be exerted on the Treasury to slash civil- institutions proposed by the Obama administration, ian public expenditure to the bone, exact user-fees for including an additional $750 billion in Obama's public services and sell off public assets including February 2009 budget proposal. The size of these allo- State infrastructure and institutions. In all likelihood, cations of liquid assets endangers the very structures his crisis is leading us to the privatisation of the State, of the fiscal and monetary system. where activities hitherto under government jurisdiction this crisis is leading us to the privatisation of the State, where activities hitherto under government jurisdiction will be The Bush "Bank Bail-out" The government's bank rescue program under the Bush administration was estimated at a staggering $8.5 trillion, an amount equivalent to 60 per cent of the total gross federal debt of $14.078 trillion (2010). This amount does not include the "aid" to financial institutions proposed by the Obama administration, including an additional $750 billion in Obama's February 2009 budget proposal. The size of these allo- cations of liquid assets endangers the very structures of the fiscal and monetary system. NEXUS ° 13 In all likelihood, i transferred into private hands. APRIL - MAY 2009 www.nexusmagazine.com