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Marc Faber: The economic crisis is a consequence of U.S. government intervention

Marc Faber, a noted market guru, thinks it would better to nationalize the banks rather than bail them out. In his view, bailing the banks out is the worst of all scenarios. He believes we are just seeing special interests feeding at the trough. I would tend to agree as you could imagine, given my recent posts on the lack of regulation in financial services. He also has a few choice words for how he would run a good bank, bad bank model.

You should also notice that he refers to “the Depression” in referring to this period.

One reason pundits like Faber sees bailouts as the worst of all solutions is the revelation that the U.S TARP funds were wasted.

The Bush administration received assets that were worth $78 billion less than the amount it invested as part of the massive infusion of capital into the country’s banks, congressional investigators have found.

The investigators concluded that the Treasury under the federal bailout had invested $254 billion into companies but the preferred stock it got in return had a market value at the time of only $176 billion, or 69 percent of what the government paid, according to a congressional oversight panel report scheduled to be released today.

Elizabeth Warren, the chairwoman of the panel, said former Treasury secretary Henry M. Paulson Jr. had promised that the government would buy the assets at their market value and that it was alarming that he didn’t do so. “At various points, Treasury has articulated policy objectives which could result in a program involved paying substantially more for investments than they appear to have been worth at the time of the transaction,” she said in written testimony submitted to the Senate Banking Committee yesterday. “The American people want to know what’s going on and they deserve answers.

Source
Treasury Overpaid for Bank Assets in Bailout, Oversight Panel Says – Washington Post

About 

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.

3 Comments

  1. Charter says:

    The crisis arose because USA and the WTO opened the doors to China to manufacture without fixing currency and employment rates on a comparable level.