#Occupy The Barn After The Horse Has Bolted

We've all heard of the Occupy Wall Street (OWS) protests. The group has a laundery list of complaints, amongst them are "bank bailouts", also known as the Troubled Asset Relief Program (TARP).

TARP was made into law more than three years ago, to very little or no public anger or reaction beyond the finance industry and financial media. But now we see average people in the streets sarcasticaly asking, "where's my bailout?". But in Europe, we are getting set to do bankers bailouts all over again.

The only thing in question, is exactly how the bailouts will be implemented. From Reuturs:

EU officials said all 27 member states had agreed that just short of 100 billion euros ($138 billion) was required to bolster bank balance sheets, a substantial step forward in attempts to protect the system against the threat of a default in Greece or elsewhere.

"The figure has been discussed with member states. It is now acceptable for everybody," an EU source involved in the discussions said.

Banks will be required to come up with the capital from shareholders first, and if that fails than national governments will provide the support. Only as a last resort will the EFSF be used to recapitalise institutions.

A deal on recapitalisation clears one hurdle for leaders ahead of the Sunday summit, but there remain large areas of disagreement, particularly over how to scale up the EFSF rescue fund to equip it to defend the likes of Spain and Italy.

So why do we we keep doing it? The obvious answer is fear of global economic meltdown.

But once saved, these banks don't lend out money. The reason is, despite being "saved" they are still in effect insolvent. In the past banks were required to mark their assets to the market price, but in 2008 that all changed with the Emergency Economic Stabilization Act:

Critics charge that claims that this had happened are akin to claiming "the problem, in short, is not that the banks acted irresponsibly in creating financial instruments that blew up, or in making loans that could never be repaid. It is that someone is forcing them to fess up. If only the banks could pretend the assets were valuable, then the system would be safe."

So, in effect the banks haven't been saved at all. Their problems have only been hidden by short sighted politicains.

But no smart politican is going to do the "right thing". Instead, they'll do what appeases the public. Which brings us back to Europe. People aren't protesting the pending bank bailouts. No, instead, in Italy and Greece, they are protesting necessary austerity measures.

It's easy to point the finger at politicans, bankers, the "system". The crisis of 2008 should have been a wake up call, but instead as a society we refuse to face reality, say good bye to the past and bravely enter the new age that is awaiting us.

Instead we cling to the past and the old ideas of the past and the right left dichotomy. On the right they want tax cuts, on the left they want benefits and free lunches. The truth is we can't have either. And until people realize this we won't be freed from the ecnomic limbo we are now trapped, and things won't get better.