Congress in its stupidity and lack of understanding of the financial debacle gave away the store to Wall Street, the perpetrators of this catastrophe who happen also to be big money contributors to the Congress critters who saddled the American people with this giveaway debt.

 

The leadership on Capitol Hill decided to embrace Hank Paulson offensive plan, with some revisions, and ignored successful examples they could have followed like theSwedish plan.

 

As I wrote in a posting: "A question is making the rounds on the net: why not use or adapt the solution of Sweden who encountered a financial crises after a housing bubble collapse in the 1990's?

 

"How about arrogance, hubris, in bed with Wall Street, stupidity, campaign contributions, hypocrisy, etc. ?

 

"From the NYTimes:  "A banking system in crisis after the collapse of a housing bubble. An economy hemorrhaging jobs. A market-oriented government struggling to stem the panic. Sound familiar?

"It does to Sweden. The country was so far in the hole in 1992 ”after years of imprudent regulation, short-sighted economic policy and the end of its property boom” that its banking system was, for all practical purposes, insolvent.

"But Sweden took a different course than the one now being proposed by the United States Treasury. And Swedish officials say there are lessons from their own nightmare that Washington may be missing.

"Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.

"That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well.

" 'If I go into a bank,' said Bo Lundgren, who was Sweden's finance minister at the time, 'I'd rather get equity so that there is some upside for the taxpaye 

Now from McClatchy this report: "Amid another swoon on global stock markets, the Federal Reserve early Wednesday announced a half-point cut to its benchmark lending rate. Five other central banks moved in tandem in a coordinated effort to bring calm to panicky markets everywhere.

"The Fed released a short statement at 7 a.m. EST, saying the dramatic half-point cut, which brings the federal funds rate down to 1.5 percent, was being taken jointly with the Bank of Canada, Bank of England, Bank of Japan, European Central Bank, Swiss National Bank and Sweden's central bank. The nations all made half-point cuts to their interest rates.

"Stock market drops have reduced the value of Americans' retirement savings by more than $2 trillion in value over the past 15 months, according to the non-partisan Congressional Budget Office.

"Financial markets in Asia and later Europe opened in turmoil on Wednesday. Japan's Nikkei plunged 9.3 percent, and exchanges in Hong Kong and Taiwan dropped 8 percent and almost 6 percent respectively. Many European exchanges the touched five-year lows as panic spread.

"The problem gripping the world banking sector is one of liquidity, meaning banks are unwilling or unable to lend to each other or businesses. That Fed has made available almost $800 billion in emergency short-term loans to keep the banking sector functioning.

"On Tuesday, Bernanke bypassed the banking sector altogether and announced he'd start providing short-term credit to major U.S. corporations who cannot find buyers for their short-term promissory notes called commercial paper.

"The last time Europe's central bank moved alongside the Fed was after the 9-11 terror attacks. Part of the global volatility on stock exchanges comes from concern the European Union's central bank is structured in a way that restricts its ability to move aggressively like the Fed.