The Big Squander - Paul Krugman

[AllentownJake]

Earlier this week, the inspector general for the Troubled Asset Relief Program, a k a, the bank bailout fund, released his report on the 2008 rescue of the American International Group, the insurer. The gist of the report is that government officials made no serious attempt to extract concessions from bankers, even though these bankers received huge benefits from the rescue. And more than money was lost. By making what was in effect a multibillion-dollar gift to Wall Street, policy makers undermined their own credibility — and put the broader economy at risk.»

For the A.I.G. rescue was part of a pattern: Throughout the financial crisis key officials — most notably Timothy Geithner, who was president of the New York Fed in 2008 and is now Treasury secretary — have shied away from doing anything that might rattle Wall Street. And the bitter paradox is that this play-it-safe approach has ended up undermining prospects for economic recovery. For the job of fixing the broken economy is far from done — yet finishing the job has become nearly impossible now that the public has lost faith in the government’s efforts, viewing them as little more than handouts to the people who got us into this mess.

About the A.I.G. affair: During the bubble years, many financial companies created the illusion of financial soundness by buying credit-default swaps from A.I.G. — basically, insurance policies in which A.I.G. promised to make up the difference if borrowers defaulted on their debts. It was an illusion because the insurer didn’t have remotely enough money to make good on its promises if things went bad. And sure enough, things went bad.

http://www.nytimes.com/2009/11/20/opinion/20krugman.html?_r=1&ref=opinion

[AllentownJake]

1. Kick

[chill_wind]

2. We'll remember this whole first decade of this new millenium

as one big long tragic Big Squander. From the surplus that the BushCo squandered (decimated) almost immediately with his tax giveaways to the wealthy, his trillions and trillions for wars...still ongoing..the trillions to banks, and one of the biggest opportunities of all for financial/banking reform--squandered--- when the banks came to Congress on their knees and Congress didn't have the guts to take their books then and there as part of the bargain.

[clear eye]

5. Well put. n/t

[Dinger]

3. K & R

[LuvNewcastle]

4. K&R

I didn't know that story about Bear Stearns. I had wondered why the rest were bailed out and Bear Stearns was allowed to fail.

[AllentownJake]

6. I read about that in Too Big to Fail

Most of the other firms on Wall Street hated Lehman's CEO personally as well. Not many of them shed a tear when he personally went down. I think he had on friend in the other CEO group.

Paulson really wasn't a fan.

[chill_wind]

9. "Bringing Down Bear Stearns" (Vanity Fair, 2008). This is a very riveting read:

http://www.vanityfair.com/politics/features/2008/08/bear_stearns200808

(8 pages)

(...)
The fall of Bear Stearns wasn’t just another financial collapse. There has never been anything on Wall Street to compare to it: a “run” on a major investment bank, caused in large part not by a criminal indictment or some mammoth quarterly loss but by rumor and innuendo that, as best one can tell, had little basis in fact. Bear had endured more than its share of self-inflicted wounds in the previous year, but there was no reason it had to die that week in March.

What happened? Was it death by natural causes, or was it, as some suspect, murder? More than a few veteran Wall Streeters believe an investigation by the Securities and Exchange Commission will uncover evidence that Bear was the victim of a gigantic “bear raid”—that is, a malicious attack brought by so-called short-sellers, the vultures of Wall Street, who make bets that a firm’s stock will go down. It’s a surprisingly difficult theory to prove, and nothing short of government subpoenas is likely to do it. Faced with a thicket of lawsuits and federal investigations, not a soul in Bear’s boardroom will speak for the record, but on background, a few are finally ready to name names.

(...)

[AllentownJake]

10. Bear was going down anyway

The short traders just realized it and speed up the process. Same for Lehman.

The funny thing is that Morgan was next and than Goldman.

When Goldman was getting close to failure, Paulson paid attention. He ignored the Lehman problem the entire summer.

[Sanity Claws]

7. Krugman likes cats!

How's that for proof that he's a Democrat

[AllentownJake]

8. I was looking for a good Paul picture

and I hadn't seen that one before.

[bvar22]

11. "officials made no serious attempt to extract concessions from bankers"

THAT is ALL you need to know!


NOW we have Your Children’s Money too !!!
And there is not a fucking thing you can do about it!
Now THIS is “Bi-Partisanship” !
Better get used to it!!
Hahahahahahahahaha!



*The MIC got their continued WARS/Occupations and INCREASES in Military Spending.

*Wall Street got their Trillion Dollars no strings attached.

*The Health Insurance Industry (Wall Street's Incestuous 1st Cousin) is very close to getting their Trillion Dollars.

*NOW, no money to fund "entitlements" or "jobs programs" setting up another "jobless recovery".

HEY!
MISSION ACCOMPLISHED!


The DLC New Team
Progressives Need NOT Apply

(Screen Capped from the DLC Website)

"American Workers CAN WILL be Forced to compete with the lowest paid workers in the WORLD! :party:

[earth mom]

12. Squander? More like MAJOR RIPOFF! Let's call it for what it is people.

:grr: