America Is Being Raped ... Just Like Greece And Other Countries

Preface: The war between liberals and conservatives is a false divide-and-conquer dog-and-pony show created by the powers that be to keep the American people divided and distracted. See this [2], this [3], this [4], this [5], this [6], this [7], this [8], this [9], this [10] and this [11]. So before assuming that privatization is a good thing, read on.

If these resources had always been in the private sector, that would be fine ... that would be free market capitalism.

But if they were purchased with our taxpayer funds and then sold to the big boys for cheap, that is looting.

Greece is thinking of selling some islands [12]. Austria is thinking of selling mountains [13] to pay off their national debt. Cities throughout the U.S. are thinking of privatizing their parking meters [14].

What's going on?

Well, as I predicted [15] in December 2008, bailing out the giant, insolvent banks would cause a global debt crisis:

The Bank for International Settlements (BIS) is often called the "central banks' central bank", as it coordinates transactions between central banks.

BIS points out in a new report [16] that the bank rescue packages have transferred significant risks onto government balance sheets, which is reflected in the corresponding widening of sovereign credit default swaps:

The scope and magnitude of the bank rescue packages also meant that significant risks had been transferred onto government balance sheets. This was particularly apparent in the market for CDS referencing sovereigns involved either in large individual bank rescues or in broad-based support packages for the financial sector, including the United States. While such CDS were thinly traded prior to the announced rescue packages, spreads widened suddenly on increased demand for credit protection, while corresponding financial sector spreads tightened.

In other words, by assuming huge portions of the risk from banks trading in toxic derivatives, and by spending trillions that they don't have, central banks have put their countries at risk from default.

Top independent experts say that the biggest banks are insolvent (see this [17], for example), as they have been many times before [18].

And a study of 124 banking crises by the International Monetary Fund found [19] that propping banks which are only pretending to be solvent hurts the economy:

Existing empirical research has shown that providing assistance to banks and their borrowers can be counterproductive, resulting in increased losses to banks, which often abuse forbearance to take unproductive risks at government expense. The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred in the absence of forbearance.

Cross-country analysis to date also shows that accommodative policy measures (such as substantial liquidity support, explicit government guarantee on financial institutions’ liabilities and forbearance from prudential regulations) tend to be fiscally costly and that these particular policies do not necessarily accelerate the speed of economic recovery.

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