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Wall Street Using Bailout To Stage A Revolution?

I just finished reading this entire article in Rolling Stone and…wow. I don’t agree with 100% of everything that is written in it, but it sure takes a hard look (from a different angle than most of us have been looking) at the banking crisis, government involvement in said crisis, and the AIG debacle. I recommend everyone read all the way through it, and then we can discuss here in the comments as I would love to hear your thoughts on this. Here are some excerpts that really hit me:

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).

So it’s time to admit it: We’re fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we’re still in denial “” we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream. When Geithner announced the new $30 billion bailout, the party line was that poor AIG was just a victim of a lot of shitty luck “” bad year for business, you know, what with the financial crisis and all. Edward Liddy, the company’s CEO, actually compared it to catching a cold: “The marketplace is a pretty crummy place to be right now,” he said. “When the world catches pneumonia, we get it too.” In a pathetic attempt at name-dropping, he even whined that AIG was being “consumed by the same issues that are driving house prices down and 401K statements down and Warren Buffet’s investment portfolio down.”

The most galling thing about this financial crisis is that so many Wall Street types think they actually deserve not only their huge bonuses and lavish lifestyles but the awesome political power their own mistakes have left them in possession of. When challenged, they talk about how hard they work, the 90-hour weeks, the stress, the failed marriages, the hemorrhoids and gallstones they all get before they hit 40.

“But wait a minute,” you say to them. “No one ever asked you to stay up all night eight days a week trying to get filthy rich shorting what’s left of the American auto industry or selling $600 billion in toxic, irredeemable mortgages to ex-strippers on work release and Taco Bell clerks. Actually, come to think of it, why are we even giving taxpayer money to you people? Why are we not throwing your ass in jail instead?”

But before you even finish saying that, they’re rolling their eyes, because You Don’t Get It. These people were never about anything except turning money into money, in order to get more money; valueswise they’re on par with crack addicts, or obsessive sexual deviants who burgle homes to steal panties. Yet these are the people in whose hands our entire political future now rests.

So, what do you think?


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Comments (16)

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  1. Neal Frankle says:

    We have a system that rewards greed. That, in and of itself is not bad as long as the greed is “checked”. In this case, the greed police fell asleep – or worse – got in on the deals.

    People let their greed become their higher power. They worshiped at the alter of money. Its sickening….but what is the solution? Do we throw out the system?

  2. David says:

    Sometimes, I wish we could throw out the system, for sure.

  3. Adam - NPF says:

    This is populist tripe which attempts to fire up our emotions, but for what purpose? Is it anger for anger’s sake? I don’t see any options expressed for a better system or any other solutions; only unfocused frustration.

    So how about we follow this frustration to its logical conclusion and throw every person who made over $100k in jail and abolish all banks. After all, only greedy short-sighted fear-mongers fall into this category. Now what?

    Want to buy a house? Good luck getting a mortgage at ANY interest rate. Car loan? Student loan? Maybe the government will loan money. Of course the government only receives money from taxes. It can borrow from other nations against future revenue, but then we just eliminated the people who pay 99% of tax revenues.

    I suggest people spend their time on more constructive activities such as bettering themselves rather than trying to tear down others. Be proud of what you can do despite adversity.

    I’d also remind you that no one forced anyone to do business with AIG and yet now through the threat of jail time the workers are being forced to give up what they have worked for. Please consider the consequences of letting the government punish a group of people for a crime defined after-the-fact.

  4. Gary says:

    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.

    I fail to understand why every one wants government involved. Do we not realize that is why we are in this mess? The SEC is the government mechanism the above claims does not exist. The SEC is as useless as the IRS.

    We have a system that rewards greed.

    Do we now? It seems to me that WE THE PEOPLE are often more interested in watching American Idol instead of doing research on the politicians that we put in office, the same politicians that knew of the AIG bonuses when handing them the bail out. In fact they protected the bonuses in the so called stimulus bill. Now the same claim to want the money back, and we still call out for more government.

    Liquidate the businesses and a better one will rise to take its place.

  5. David says:

    “now through the threat of jail time the workers are being forced to give up what they have worked for.”

    Um, they ran the company into the ground. Last time I checked, I didn’t get paid bonuses for screwing up royally. Sorry, have to disagree there. And yes, some did not have a choice of doing business with AIG, as they insure practically everything under the sun, whether you know they do or not.

  6. Very interesting… I’ll have to read the rest of the story. I’ve been viewing the bailout and the increased governmental ownership of banks as a movement towards socialism… power grabs by legislators hungry to control more and more of our lives. At the current rate, it’ll be too late once we wake up.

    The premise of this article (not having read more than what you offered) seems to take it the other way – bankers and free market types staging the coup.

    Interesting stuffs… I’ll have to read and revist!

    Dave

  7. rocketc says:

    A free market, capitalistic system would have let AIG and all the other poorly run, unethical, greedy banks fail.

    Why is our President and our Congress giving our money to failing banks? Furthermore, Tim Geithner, Chris Dodd and Barack Obama all knew about the AIG bonuses some time ago and did nothing until they made news.

    Greed and lust for power is not confined to the free market. It also exists in the White House and in the Capitol Rotunda.

    Trusting our government to take ownership in banks, insurance companies, auto makers and hedge funds might be jumping from the proverbial frying pan and into the fire.

    Especially since the Chinese hold all the notes to this mess.

  8. david says:

    rocketc – I think you are forgetting when this mess started. Why did Bush and the Republicans agree to bail out all these banks even before Obama came in? I am not saying he is innocent, but I believe you know this started before he took office.

  9. rocketc says:

    David, certainly the Bush admin shares the blame for this mess. I will the first to admit it. Bush even admitted that he forsook his “free market principles”. The Bush presidency was Republican, but it was anything but conservative. Remember when his dad called “reaganomics”, “voodoo economics”? The Bush’s are “blue-blood” Republicans. Even the war was conservative policy. Bush was conservative on right to life issues and on protecting our borders and sometimes on taxes. That’s it. Almost all of his other policies – prescription drugs, McCain-Feingold, abnormally low interest rates, the bailouts – he was liberal.

    That said, Tim Geithner wrote the AIG bailout during the Bush admin. Furthermore, if it was a mistake for the Bush admin to bailout these banks, why is Obama trying to do more of the same – wasn’t he all about change?

    If we are going to assign blame to the Bush admin, then we must also consider that the Bush admin warned us about Fannie Mae and Freddie Mac on numerous occasions, starting in 2001. In 2005, Dems in Congress resisted any attempt to reform those institutions. Raines, the CEO of Fannie, made off with $90 million in bonuses in 2004. It is important to remember that he was compensated by the number of mortgages that he insured – not the quality of such mortgages.

    Once we deal with FM and FM, then we have to go back to the Community Reinvestment Act under President Clinton in 1999 that pressured banks to make risky loans . . . that FM and FM then insured . . . and then other banks bought stock in FM and FM . . . and then Barney Frank said that Fannie and Freddie were sound financially . . .

    Reps and Dems both share blame, but the solution is not to increase government interference in the market, but to eliminate it. President Obama is seeking for greater government control in the free market. It was a bad idea under FDR, it was a bad idea under W, and it will end badly under President Obama.

    These banks were not allowed to fail because politicians from both parties were getting huge sums of money from financial institutions. Money that you and me and our children will have to pay back.

    Chris Dodd rec’d $103K from AIG alone
    Barack Obama rec’d $101K from AIG – in 18 months as a Senator. President Obama and the liberals in Congress (libs on both sides of the aisle) are using the AIG flap to seize more power for the federal government.

  10. rocketc says:

    One more thing, David – it was a private watchdog group that first detected a problem with the Madoff swindle in 1999 or 2000. They reported Mr. Madoff to the SEC, but it took until 2008 for the SEC to figure out what was going on.

    The less we have to deal with the government, the better off we are.

  11. david says:

    And McCain and Romney got a ton from them as well, so no one is immune. The reason I asked you about Bush is that Republicans are so quick to blame this mess on Obama. Unfortunately for him, he inherited a lot of it…and then proceeded to put Geithner in charge, which I don’t like at all.

    If you read the entire article, it’s not about the government trying to take control at all. The article is about Wall Street manipulating things so THEY can take control. Anyone can talk about free markets, capitalism, etc, but this article was not about that at all.

    You always say things about “less government” but I seem to remember something about government assistance being OK on your site. Am I mistaken or was that someone else’s site?

    I just think it’s funny that some Republicans want less government in the markets, but at the same time they think it’s ok to force God on people, make choice illegal, want to make laws saying what we can do in the bedroom, and outlaw people who love each other from getting married. Is it more govt or less govt that they really want? Cause it seems like “more” to me.

  12. rocketc says:

    David, the markets and government are working together to take control. If government had followed the Constitution and allowed banks to follow their own credit lending policies and then allowed those same banks to sink or swim based on their own decisions, we would not be in this mess. We need to rein in our government. I would encourage you and all of your readers to read the Constitution and see how far we have drifted.

    Government comes from the people. Our Constitution defines what government can and cannot do.

    I have never met anyone who wanted to force God on people. You can make up your own mind on that matter. I have met plenty of people who would like to restrict how I practice my faith . . .hopefully government will protect me from them.

    The role of the US Government is to protect the weak. If you believe that unborn children should not be protected . . . I guess we will have to disagree on that one. Regardless, those of us who believe that an unborn child, no matter how they were conceived deserves a chance at life, have the same right to free speech as those who believe that “inconvenient” life should be snuffed out. I have a grandfather who is suffering from Alzheimers, maybe my grandmother should exercise “choice” regarding his life as well. After all, an unborn child in the second trimester is more “viable”.

    What you do in your bedroom is your business, but if you are going to use law and public policy and public money to improve your financial situation because of what you do in your bedroom, then citizens have the right to speak about what you do in the bedroom.

    The will of the people was heard in California last year, was it not? Did our system work that time?

  13. david says:

    Constitution – nice in theory, but it’s outdated. Not to say that what is in it is not good, but it needs some work. If we lived 100% by the Constitution, I would be afraid as to where we would be as a country. Can you imagine if we lived our lives in 2009 guided fully by a document written that long ago? Imagine following the Bible 100%; it cannot happen.

    Who exactly has restricted your faith? Last I checked, religious folks were in the majority in this country. Our kids even have to say One Nation Under God…and God is mentioned on almost every Federal building, yet I don’t believe in him/her/it. So are those buildings not mine as well? Republicans during the last election wanted to make this a “Christian” country, and tried to market Obama as a Muslim. First of all, who cares if he was? It’s just another religion like the rest. Secondly, I thought we left England and set up the Constitution to get rid of religion in politics, no?

    I believe a woman already standing and living on planet earth has more rights than an unborn child that she conceived after being raped or molested by her father, yes. And if she were to die from childbirth, I think she has the right to choose life for herself. Do I think abortion should be used as birth control? Nope, it’s a terrible thing for sure. But I do think people should be able to make up their own minds. As for your grandfather/mother – yes, if he would have wanted it, absolutely. I hope someone pulls the plug on me if I am like that, and I will stipulate it before I get there. Why should the govt be able to tell me if I can do that or not?

    As for what I can do in my bedroom – if I were gay, people would be trying to legislate it as a crime (yes, they still do that in parts of the country). They would make marriage illegal between 2 people who love each other, yet make it legal for people who end up in divorce 50% of the time anyway…even though divorce tears at any family values that marriage amendments proclaim to protect. I am married, and some of my gay friends are married. What happened to my marriage when they did it? Nothing. Same thing that would happen to yours and everyone else’s. This is what I mean by legislating in the bedroom.

    As I said earlier, people cannot have it both ways. You don’t want any interference by the government in your life financially, yet you are OK with it to make choice illegal for women (at the expense of the child that you don’t want on public assistance), ban gay marriage, stop immigration, or take away civil rights. You either want government to legislate or you don’t – you cannot have it on a per-incident basis and use that as a political stance.

  14. plonkee says:

    David, I think you’ve just nicely listed all the reasons why I wouldn’t fit in well in the US. And why I worry when my friend and his boyfriend go to Tennessee on vacation.

    Little government is just as important in social issues as it is in fiscal issues, if not more so. After all, you can usually work with whatever ham-fisted tax regime is concocted by politician.

    England might not have separation of church and state in law, but we’re so much better at putting it into practice.

  15. david says:

    Amen to that Plonkee, amen to that.

  16. A couple of comments here:

    AIG is a big company (as if that weren’t obvious) and even within the division that gave us the toxic credit default swaps, there were still many other, legitimate business activities that actually earned money for AIG. Most of the bonuses that we’re talking about were promised to people in these other business practices, who had nothing to do with credit default swaps, to keep them from jumping ship to other financial companies.

    How would you react if you worked for a company doing good work, found out that the company was in trouble and started circulating your resume, had your boss come in and write a contract promising you a bonus if you stayed on through next spring, and then when the bonus got paid, Congress voted to take it all back from you? Just asking…

    Second: Make no mistake about it: these bank HAVE FAILED. All this talk about “let the banks fail” is nonsense. They have failed and now we’re simply in damage control mode. Do you know what would happen if AIG went bankrupt and had to liquidate it’s assets? The law of supply and demand says that if AIG starts selling trillions of dollars of stock, the price of all of the stock is going to fall substantially. THAT is why we the people HAD to bail out this company. It’s in OUR own best interests. Do you think your 401k statement looks pitiful now? Wait until one of these “too big to fail” banks fails and the government doesn’t bail it out.

    What we should all be asking ourselves now is: how do we make sure that a future bank never gets “too big to fail.” It’s not as though this is the first time in US History that this has happened. So how about if we make it the last?

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