Wednesday, October 01, 2008

The New Bush Doctrine: Socialism In the Name of Taxpayer Safety

With all of the bailout vote talk, Wachovia being acquired by Citigroup slipped to a sub-headline.

Citigroup paid only $2B for Wachovia but inherited its $312B mortgage portfolio including its share of risky loans. The government-engineered takeover capped Citgroup's mortgage loan losses at $42B, committing to absorb any losses beyond this. The government -- you and me -- received $12B worth of warrants for Citigroup stock and preferred shares.

Citgroup, along with Bank of America and J.P. Morgan Chase, have quickly become larger than most nations' GDPs. Together, the three have over 30% of all U.S. deposits (31.3% according to 9/30/09 WSJ article).

An investment firm, insurance company, mortgage holders and branch banks are now all or partial taxpayer properties.

The Bush doctrine can now be defined as the process of socializing key private businesses from key industries in the name of protecting the taxpayers.

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