Thursday, March 19th, 2009
A devastating critique, and well worth the read. There is also an excellent 20 minute video interview (incl. transcript) with the author on Democracy Now!. The comments on the original article are also enlightening, and one poster, mts881, identified the single major flaw in the article – too much focus on the tattered bandages of fiscal regulation and not enough on the root cause:
“Look at it this way. A bunch of high schoolers go into a classroom. There is a desk full of liquor. They drink it, nothing bad happens (aside being very hung over). Next week, same thing happens. This time, they decide to drive to the mall and run over a dozen pedestrians on the way. Is the problem here a lack of laws about drunk driving and underage drinking? Is it a lack of policemen to watch every move they make, to ensure this wouldn’t happen? Or is the problem that someone kept giving them free liquor? Certainly this person would bear the lion’s share of the blame.
This is how it is with the federal reserve. They keep pumping out free money, these guys keep creating bubbles to push that money into the system (as this is how they get paid). Some do it ethically, some don’t. This time, they were unethical on such a huge scale it broke the system. However, the system is inherently flawed. No amount of watching can prevent this over a long enough time line. Creating a centralized huge regulator just creates one-stop shopping for corruption.”
Perhaps the other flaw in this article is that it identifies no real solutions. Well, here’s one. End the Fed. And really, in a nutshell that’s the most recent chapter in this sordid story. If you want to go a little further back, see the…
Matt Taibbi, Rolling Stone
March 19, 2009
The global economic crisis isn’t about money – it’s about power. How Wall Street insiders are using the bailout to stage a revolution
It’s over – we’re officially, royally fucked. No empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline – a corporation that got rich insuring the concrete and steel of American industry in the country’s heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.
The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history – some $61.7 billion. In the final three months of last year, the company lost more than $27 million every hour. That’s $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG’s 2008 losses).