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Bite of the Day: Bank Loses $19Billion

In the largest fallout in Europe from the US economic crisis so far, UBS - Switzerland’s largest bank has reported a loss of 19 billion dollars. Apparently, the subprime mortgage crisis that is rattled the American economy to warnings of depression, is doing more than decreasing consumerism abroad.

This ties in with the recent government bail out of Bear Stearns that led a homeowners demonstration outside the offices of Bear Stearns, JP Morgan Chase. There, JP Morgan Chase came in and “bailed out” Bear Stearns. Who was really bailed out? Wall Street. The people who have their savings, pension and investments tied in with Bear Stearns are not bailed out by any sense of the word. The Federal Reserve put up $30 billion to help JP Morgan Chase buy Bear Stearns, now worth around $300 million.

The actions of the government, particularly the Federal Reserve - now becoming more entwined with the government - are not common actions. They are not simple injections into an economy for a boost. The Federal Reserve is now in the process of nationalizing banks. What does that mean for you? Well, to give you an idea, that’s what happened during the Depression in the first quarter of the 20th century. Banks went out of business. The Fed, then newly empowered with laws to save the economy, took over. If every economic crisis leads to a more nationalized, centralized bank, our economy will be in the hands of fewer and fewer.