Why not INVEST in America’s future?
Great idea, about the conversations, DFW! The thing is, Sinema and Manchin don’t want to know.
“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” — Upton Sinclair
The Real Cost of the 2008 Financial Crisis
The aftermath produced a lost decade for European economies and helped lead to the rise of anti-establishment political movements here and abroad.
By John Cassidy
The New Yorker, September 10, 2018
Excerpt…
The subprime fever originated in the United States, but soon spread to European behemoths like Deutsche Bank, HSBC, and Credit Suisse: by 2008, close to thirty per cent of all high-risk U.S. mortgage securities were held by foreign investors. Although the major international banks were domiciled and regulated in their individual countries, they were operating in a single, integrated capital market. So, when the crisis struck and many sources of short-term bank funding dried up, the European banks were left tottering. In some respects, they were in even worse shape than the American banks, because they needed to roll over their dollar-denominated mortgage assets, and Europe’s central banks and lenders of last resort—the European Central Bank, the Bank of England, and the Swiss National Bank—didn’t have enough dollars to tide them over.
Paulson and Bernanke didn’t predict any of this when they made the fateful decision, on September 14, 2008, to let Lehman fail. Paulson, in particular, was keen to escape the label of “Bailout King,” which he had been saddled with earlier in the year after orchestrating a rescue of Bear Stearns. An international banking disaster was avoided only because the Fed agreed to provide its European counterparts with virtually unlimited dollars through currency-swap arrangements, and to give troubled European banks access to various emergency lending and loan-guarantee facilities that it established in the United States. “The U.S. Federal Reserve engaged in a truly spectacular innovation,” Tooze writes. “It established itself as liquidity provider of last resort to the global banking system.”
But the Fed hid much of what it was doing from the American public, which was already choking on the U.S. bank bailout. It wasn’t until years later, as a result of the Dodd-Frank financial-reform act and a freedom-of-information lawsuit filed by Bloomberg News, that the details emerged. The sums involved were huge. According to Tooze’s tally, the Fed provided close to five trillion dollars in liquidity and loan guarantees to large non-American banks. It also provided roughly ten trillion dollars to foreign central banks through currency swaps. As with the seven-hundred-billion-dollar bailout for domestic banks, practically all this money was eventually repaid, with interest. But, had the full scope of what the Fed was doing emerged at the time, there would have been an uproar. Fortunately for the policymakers, there was no leak. An official at the New York Federal Reserve, which helped enact many of the covert lending programs, told Tooze that it was as if “a guardian angel was watching over us.”
Continues…
https://www.newyorker.com/magazine/2018/09/17/the-real-cost-of-the-2008-financial-crisis
Capitalists don’t call it “socialism” when they are the beneficiaries. They call it “loan forgiveness.”
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