Moral hazard, or plain-old thievery?
The NY Times just published a very interesting piece titled The Looting of America’s Coffers. It’s about two economists who published a research paper called “Looting”. That was 16 years ago, and it was about the financial busts of the 1980s. The authors argued that the perpetrators knew very well that the whole scheme was a house of cards.
However, they were able to make so much money so quickly that it didn’t matter. It didn’t matter if the crap loans they wrote were ever paid off. They only needed to hold up for a few years before collapse. Then the government and the Fed would step in, and conveniently cover all the losses at the expense of taxpayers. By that time the perps were set for life.
Drawing a comparison to today’s situation is hardly necessary. But politicians won’t make any changes without us demanding it. Here is the form to contact your local congressmen. Please do:
https://writerep.house.gov/writerep/welcome.shtml
Tell them to support Ron Paul’s bill to audit the Federal Reserve. Tell them to get some real economists in the treasury, not any more goddamn investment bankers or puppets like Geithner. Tell them to reveal the AIG counterparties. IT’S OUR MONEY THEY’RE WASTING.
Do NOT ask them. Tell them. If they don’t do what you ask, inform them that you will vote against them and actively campaign for any opposition if they don’t. We need to get a lot more pissed off than we are.
2 Comments
I know this post is a few days old, but I just wanted to ask…
The AIG counterparties have been revealed since you posted this. The pressure to do so came from all over. The backlash against AIG had a lot to do with that.
But now details of Geithner’s Toxic Asset Plan have been leaked to the NYT. Do you think there will be a similar backlash against Geithner’s plan, which basically assumes that the banking system is fundamentally sound and just needs more money? Or do you think Geithner will be given free rein to keep funneling taxpayer dollars into a flawed system by the billion?
We may be about to witness backlash of legendary proportions. ANY perceived missteps by Obama/Geithner at this point could be disastrous.
If this new “private-public” partnership doesn’t go over well with the taxpayer, I think we might get some actual social unrest. People are starting to get real pissed off. I feel bad for Geithner, he comes off like a goddamn idiot. I would too, don’t get me wrong. But he’s gotta resign.