The W.C. Varones Blog has not often had anything positive to say about Sheila Bair. Not when she looted the FDIC insurance fund to bail out the wealthy, uninsured depositors of IndyMac. Nor when she wasted FDIC funds hiring celebrity huckster Suze Orman to pimp bank deposits.
But in retirement, Sheila Bair just found redemption by writing an epic column for the ages, exposing for the masses Ben Bernanke’s ZIRP as a looting of the middle class to bail out the banksters.
For several years now, the Fed has been making money available to the financial sector at near-zero interest rates. Big banks and hedge funds, among others, have taken this cheap money and invested it in securities with high yields. This type of profit-making, called the “carry trade,” has been enormously profitable for them.
So why not let everyone participate?
Under my plan, each American household could borrow $10 million from the Fed at zero interest. The more conservative among us can take that money and buy 10-year Treasury bonds. At the current 2 percent annual interest rate, we can pocket a nice $200,000 a year to live on. The more adventuresome can buy 10-year Greek debt at 21 percent, for an annual income of $2.1 million. Or if Greece is a little too risky for you, go with Portugal, at about 12 percent, or $1.2 million dollars a year. (No sense in getting greedy.)
Think of what we can do with all that money. We can pay off our underwater mortgages and replenish our retirement accounts without spending one day schlepping into the office. With a few quick keystrokes, we’ll be golden for the next 10 years.
Bair is exactly right. Wall Street fatcats blew up the financial system and crashed the economy. Now the Federal Reserve is bailing them out by giving them 0% loans at the expense of widows and orphans earning 0% on their dwindling savings.
HT: Our good host, H.M. Stuart