China Belittles Bigger Bailout
China knows where its interests lie.
But could they be with regular Americans?
While many in China praised the bailout of Fannie Mae & Freddie Mac, many others are correctly damning the bigger bailout being passed for Wall Street.
Strangely enough, the interests of China’s government align strongly with the interests of America’s people – both will be harmed irreparably by this massive transfer of real resources and capital from main street to Wall Street.
Before digging into the views of Chinese commentators, let’s see what Ron Paul, one of the strongest advocates against the military-industrial-banking complex, has to say about a bailout for a crises he predicted (along with many others mostly ignored by the media):
Now of course China is not interested in the welfare of Joe 6 Pack. It just happens that the inflation to fund this massive bailout of reckless financial institutions will harm both China & Joe.
As CEIBS Professor of Economics and Finance Xu Xiaonian quipped yesterday “The fundamental source of Wall Street’s meltdown is caused by Federal Reserve overissuing currency.”
So how could issuing massive amounts of new currency solve the real problems at hand (the solvency of reckless & irresponsible financial institutions unaware and unconcerned about their black swan birthing potential)?
Polls show support for the bailout at 7-28% of America’s population. Given the absolute power embedded in the bailouts (the bill going through congress now gives Paulson & Bernanke virtually unlimited discretion in which assets to buy up with the money being created out of thin air) for banks that just recently paid the largest management bonuses in history, it’s understandable that most people are upset and can see that such a bailout will screw them.
As China Finance, China News, and Chaobao Financial News stated, these actions by the Federal Reserve is only “creating money that does not exist which leads to the inflation of liquidity,” and that by showering the bailout on just a handful of stupid financial companies (my take), the Federal Reserve is “only protecting and encouraging large companies’ wrong doing.”
To see why the bailout cannot really save main street, see Can The Rescue Plan Fix the US Economy? or listen to this guy (Peter Schiff):
What do you think of the proposed bailouts by Paulson and Bernanke?
And do you think it is in China’s interest to support or oppose this kind of bailout?