The American Way: rob poor to save rich
I read the whole thing. The article from the always self-interested, system-friendly Wall Street Journal was tougher than many other articles pouring out of the mainstream news organizations , but there was clearly still a lot of bald-faced soft-pedaling going on.For instance, there was:
-- No mention of criminal prosecutions.
-- No mention of recovering any of the inflated salaries paid to the executives who caused the collapse.
-- No mention of defunding the trillion-dollar Iraq/Afghanistan adventures to help cover the costs.
All that is quietly hinted at is the assumption that the hapless taxpayer must and will -- as night must follow day -- be the ultimate savior of the failed banks, companies and crooked individuals who who created, exploited and profited from the scam.
And that means fewer services for the public and higher taxes and cost impostions on the powerless taxpaying bottom 90 percent of of the public which, under these circumstances, is the group least able to afford to do it.
That's point blank robbery of the impoverished many to protect the enriched few.
Joseph Stiglitz offers a 6-part solution
to borrowing against pyramid scheme
The problem: For all the new-fangled financial instruments, this was just another one of those financial crises based on excess leverage, or borrowing, and a pyramid scheme.Now the solution.
The new "innovations" simply hid the extent of systemic leverage and made the risks less transparent; it is these innovations that have made this collapse so much more dramatic than earlier financial crises. But one needs to push further: Why did the Fed fail?
First, key regulators like Alan Greenspan didn't really believe in regulation; when the excesses of the financial system were noted, they called for self-regulation -- an oxymoron.
Second, the macro-economy was in bad shape with the collapse of the tech bubble. The tax cut of 2001 was not designed to stimulate the economy but to give a largesse to the wealthy -- the group that had been doing so well over the last quarter-century.
The coup d'grace was the Iraq War, which contributed to soaring oil prices. Money that used to be spent on American goods now got diverted abroad. The Fed took seriously its responsibility to keep the economy going.
[…]
Finally, at the center of blame must be the financial institutions themselves. They -- and even more their executives -- had incentives that were not well aligned with the needs of our economy and our society.
They were amply rewarded, presumably for managing risk and allocating capital, which was supposed to improve the efficiency of the economy so much that it justified their generous compensation. But they misallocated capital; they mismanaged risk -- they created risk.
All of them pigs, dining from same trough
It is my experience that psychiatry, Scientology and fundamentalist religions are turnoffs for genuinely critical thinkers. Critical thinkers are not so desperate to adjust and be happy that they ignore adverse affects -- be they physical, psychological, spiritual or societal. Critical thinkers listen to what others have to say while considering their motives, especially financial ones; and they discern how one's motivation may distort one's assumptions.
Quote for the day from Mark Gilbert
Investment banks won't be writing much business in the coming weeks, busy trying to unwind the trades they did with Lehman and working out where the U.S. bailout of Fannie Mae, Freddie Mac and AIG leaves them.
Belatedly, they are discovering the truth of another Buffett aphorism; unraveling a derivatives trade, the so-called Oracle of Omaha [Warren Buffet] said, is like trying to carry "a cat home by its tail." The scratches, however deep, will heal eventually; the scars, though, will linger for years.
Squibs
Brokers like to jog, fish, masturbate, study showsItalian operas in deep $$ trouble
Killer karate gangs
One divorce lawyer for each of his 86 wifes
posted by Tom Nadeau at 4:28 AM
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