While all over the country people feel the effect of the financial crisis on their every day lives, from house foreclosures, to more work hours or the constant fear to be fired, banks can be relatively sure that they are “too big to fail”. This leads to more risky behavior by the creditors of the banks, especially those banks which are systemically important.
The IMF published a paper in which they showed that the knowledge of a bailout by tax payers money reduces the borrowing costs for banks by 0.8 percentage points. Bloomberg did the math:
To estimate the dollar value of the subsidy in the U.S., we multiplied it by the debt and deposits of 18 of the country’s largest banks, including JPMorgan, Bank of America Corp. and Citigroup Inc. The result: about $76 billion a year. The number is roughly equivalent to the banks’ total profits over the past 12 months, or more than the federal government spends every year on education.
Did you read it: “more than the federal government spends every year on education”! Is this capitalism? No, thats socialism in its purest form, however just for corporations. And that is by the way also the amount of money we would need for the new healthcare bill, which is of course not affordable.
- rottencapital posted this