Defaulting banks - where will it stop?

[David Guyatt]

Ticker Forum's Karl Denninger in typically pugnacious, and astute, form:

The Fed claims to be a "private central bank" but in fact that's a lie too - their losses are yours, and their "liquidity" is your tax money. If The Fed wants to be a "private bank" then cut it off from taxpayer subsidy and revoke its right to print money - instead, force it to compete for private capital just like everyone else.

I actually find the above definition of "private" to be entirely accurate. Privatizing profit yet making sure costs and losses remain in the realm of the public is business as usual.

This is precisely what happens in the arms industry for example. The costs and losses - known apocryphally as "research and development" is the public's involuntary contribution to collective defence, whereas as soon as a weapon project reaches the stage where it can enter service, it magically transforms from being a pubic project to a "private" project where all profits accrue to the arms company who developed the weapon (with our money).

In other words, the whole political business structure is rotten through and through, and the tax system is simply Robin Hood in reverse -- stealing from the poor to give to the rich.

Or as Monty Python had it in the Dennis Moore theme song:

http://www.youtube.com/watch?v=lnf2aRCYRSI