It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it. The result is one of those deals where one wrong decision early on blossoms into a lush nightmare of unintended consequences. We thought we were just letting a friend crash at the house for a few days; we ended up with a family of hillbillies who moved in forever, sleeping nine to a bed and building a meth lab on the front lawn.I will not quote endlessly from the article but his introduction sums up the situation, in his unique style, rather well. Regular readers will know that I was firmly opposed to any bailouts at the time of the financial crisis blowing up, and have been firmly against ever since. Of course, the massive scale of the bailouts in the US only became apparent a long time later, thanks to Bloomberg's persistence in pursuing the detail of the Federal Reserve's support for the banks, at a grand total of over $7 trillion in guarantees and lending limits. The interesting thing about the Taibbi article is that it puts some of the details of the kind of shenanigans that were taking place, such as how bank executives benefited from the support. Again, I will not detail the article here, but my interest is that Matt seeks to foment outrage, and he is right to do so. The reason I mention Matt's article is that I had it in mind when I read this:
At the behest of its former chief executive, Maurice Greenberg, AIG (AIG) is considering joining a lawsuit filed by its shareholders against the government. On Wednesday, according to the New York Times, Greenberg, 87, will try to persuade the AIG board that the terms of the company’s $182 billion government bailout were too onerous, the interest rates were too high, and ultimately, that AIG shareholders got a raw deal. What’s that about biting the hand that feeds you?Since this article, AIG have rapidly retreated from the lawsuit in the face of general public outrage. The first reason I write this post is that the initial action of AIG is beyond belief, and indicates that they are entirely incompetent.The second reason is a more fundamental concern; they actually must have thought that they could use the law to achieve their ends. This suggests that financial institutions really believe that the law in the US is putty to be toyed with. No sense of a functioning judicial system would give even the slightest inkling that AIG could win, but AIG nevertheless believed they might do so. Such an impression can only come from experience, and this returns to the many points made in Matt's article. The situation is one in which the US government and the federal reserve, and the judicial system seem completely under the influence of the major banks and financial institutions.
Matt is seeking to foment outrage and I am guessing that, when surveying the world around him, he must be baffled that there is so little outrage. And there is so little. The nearest thing to popular outrage were the sit-in protests whose name I cannot even remember (I did visit one of the sit-in sites, and found that the protesters had nothing coherent to say). Other than this, there seems to be little popular outrage, and I find this odd. It seems that key institutions of state have been, and continue to be, corrupted by these major financial institutions. My belief is that part of the problem has been the focus on the ills on the banks, or 'banker bashing', when the ills are actually to be found in the state institutions that are supporting them. I will even go as far as to say the banks are not to blame. Why, when they have every reason to play the game as they can do, would they do otherwise?
Yes, there might be some personal ethics that might prevent the banks acting to use the system as they do but that is not the point. Banks, by their nature, are institutions aimed at making money and they will therefore seek to further this interest. There should never have been a state system that allowed their rampant corruption in the first place, and that system is and can only be the responsibility of the state. In summary, just as Matt must look around him with bafflement, I find myself doing the same. Where is the outrage, and demand for reform?