Jesse at Crossroads Cafe:
The notion is that by ‘saving the banks’ they will be able to support the real economy with loans to spur economic activity.
It is the same mindset that provides for huge tax cuts to the top end of the income chain, the very group that benefited from the latest bubble. Its a variant of the ‘trickle down’ theory popularized by the Republicans under Reagan.
The banks prefer to take the Fed and Treasury money and guarantees at near zero percent cost, and loan it back to the public (after all it is their money) in revolving credit (credit cards) at 18%.
It’s a sweet setup…