Matt Taibbi Puts Things in Perspective

Sep 26, 2018

The bottom line is that everything Taibbi suspected in 2008, everything he knew in his gut was just plain wrong, is only the tip of an iceberg that will continue to affect billions of people worldwide for generations to come. The simple truth, as Bernanke eventually conceded long after government policy had failed the nation and the world, is that top down economic policy is idiotic and history won’t treat any of us kindly unless we take the steps to tilt the board back up to a level playing field. As Taibbi says, “Losers must be allowed to lose.”

His article tells us why nobody cares about the continuing and now increasing number of foreclosures. The market continues to be tilted toward the banks and away from the consumers, without whom there would be no economy. I think most people know in their gut that the meltdown worked to the advantage of the banks and to the disadvantage of everyone else — homeowners, taxpayers, consumers, and of course pension funds, most of whose losses are still being concealed in the vain hope that somehow they will make up ground.

Until it becomes politically necessary to run against the banks, the playing field will be contorted. We are the ones who make things politically necessary. That alone should make you want to vote for candidates who want to address the bank control over our government’s policies.

see Matt Taibbi article in Rolling Stone

Here are some interesting passages from his article.

history is written by the victors, and the banks that blew up the economy are somehow still winning the narrative

Banks like Lehman had lent billions to fly-by-night mortgage mills like Countrywide and New Century. Those firms in turn sent hordes of loan hustlers into lower-income neighborhoods offering magical deals to anyone who could “fog a mirror,” as former Countrywide executive Michael Winston once put it to me. The targets were frequently minorities and the elderly.

The loans were designed to have short, fragile lives, like fruit flies. They had to stay viable just long enough to be sent back to Wall Street and resold to secondary buyers, who took the losses.(e.s.)

the game had nothing to do with whether or not the homeowner could pay. The homeowner was not the real mark.(e.s.) The real suckers were institutional customers like pensions, hedge funds and insurance companies, who invested in these mortgages.

A blizzard of post-2008 lawsuits involving pension funds testifies to this. One State Street fund lost 28 percent of its value. Plaintiffs like the Iowa Public Employees’ Union or an Electrical Workers’ Union in Illinois or even the Zuni Native American tribe in Arizona and New Mexico all lost millions because of mortgage investments.

The Special Inspector General of the TARP put the gross government outlay at $4.6 trillion, with over $16 trillion in guarantees. Bloomberg concluded the rescue expenditure was $12.8 trillion. Fortune (which saluted the investment as hugely profitable for America in the end) put the number at $14 trillion. The Levy Institute at Bard College did probably the most extensive study, and put the number at $29 trillion.

everyone in the upper echelon of the finance community got Paid In Full in the bailout, even the exact people who screwed up the worst (e.s.). But outside Manhattan? It was like Warren Buffet’s partner Charlie Munger sneered: People should just “suck it in and cope.”