Stagflation

Stagflation, inflation, recession, rising unemployment, lack of liquidity and the housing industry sector is in an all out depression and I smell a rat. At the eleventh hour on the eve of the biggest bankruptcy in history of a mortgage company a knight in shining armor swoops in to save the day. Bank of America’s buyout or bailout of Countrywide Financial became news just after a code-worded speech by Federal Reserve Chairman Ben Bernanke and 1 hour before the close of the stock market yesterday. Why and how did Bank of America buy a company that has lost nearly 90% of its value and only has $2 billion in real assets after it lost more than $40 billion? Bank of America had invested $2 billion in Countrywide so they are protecting their investment and since Countrywide has $55 billion in FDIC deposits then by buying Countrywide, BOA will get $55 billion from the pockets of poor-taxpayers, although they will say they are saving the fed, and reap $670 million on the backs of shareholders who will be bought at 18 cents on the dollar. Federal law prohibits any one bank from holding more than 10% of American deposits. Bank of America has slightly more than 10% now and so how can the Justice Department approve the merger when it is clearly illegal? Although they will say that because Countrywide is a Savings and Loan it doesn’t count towards the 10% restriction. Nonetheless their deposits won’t remain as thrift deposits once BOA owns them –hmm. It is a combination of the good old boy network and a separate set of laws for rich white males and desperation on the part of a government that is facing the biggest international economic collapse the world has seen in modern history.

New York Attorney General Andrew M. Cuomo, California Attorney General Jerry Brown and Illinois Attorney General Lisa Madigan are all investigating Countrywide’s lending and business practices. Countrywide’s CEO Angelo R. Mozilo sold his stock in the company for $130 million just as the company knew it was going into the tank. Mozilo leaves with a hefty pension and a private jet. Thousands will be laid off from their jobs, receive no pension and probably have no savings.