I stumbled upon this over at Wall Street blog Seeking Alpha and thought it might be a good idea to share with you. See this kind of info is what we’re not getting from the teevee where they like to tell us that everything is going to be just fine, eventually. Looking at these charts, it’s not hard to wonder if capitalism as we know it is on the precipice of major upheaval. Or at least our financial future. The aftermath of the Great Depression brought a new economic system in most industrialized countries that blended aspects of democracy, socialism and capitalism. Those that did not embrace this paradigm chose communism to their economic and social detriment, generally speaking. If the USSR’s disastrous war in Afghanistan (among other things)  broke the back of pure communism in the former Soviet Union, will historians look back years from now and say that Bush’s expensive and unpaid-for adventure in Iraq broke capitalism as we know it? Time will tell…we are indeed in uncharted and choppy waters with the perfect storm possibly on the horizon.

The concept that more borrowing in terms of the “bad bank” where banks could just dump their “toxic assets” AKA bills that folks ain’t willin nor able to pay would help matters is ludicrous at this point. Gee, I’d love a “bad bank”, an extra-nasty bank  where I could just send all the mortgage, light, Amex and DirecTV bills I’d rather not deal with cuz um…it impacts my bottom line. And ability to buy whatever I want. HWHUT?! Check out Chris Bowers’ on the fact that the American taxpayers have already bought the banks’ shitpile — this strategy just really prima facie ain’t workin’:

Americans of all stripes are justifiably upset over the looming Obama administration plan to spend $250 billion on purchasing worthless assets from banks. Among many of the progressives vocing opposition to this plan, Jane Hamsher, Paul Krugman and Joseph Stiglitz had some choice words on the matter today. I am with all of them, in that I too oppose The Joker becoming Treasury Secretary.

However, there is something we have overlooked in the argument over spending $250 billion to purchase toxic assets: we have already spent $2.4 trillion purchasing toxic assets. While it is still a bad idea to spend another $250 billion doing this, it would actually only increase the price tag by 10%…

Anyway, here’s a bottom line for you to peep. This is a chart of borrowing by U.S. banks from the Federal Reserve from 1919 through Dec. 2007 (yeah, that rise in the 1980s is Reaganomics in action):

Now, same chart through December 2008:

A close look at the first chart shows that bank borrowing from the Fed wasn’t used much as a tool used during the Great Depression. We survived that. Can the Depression 2.0 economy survive the line on the second chart above getting any taller? I’m just asking.

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