“One of the Biggest and Most Elaborate Falsehoods Ever Sold to the American Public” (The Bank Bailouts)

wallstreet_3765

Taibbi is wrong on plenty of stuff but he has done an excellent job of covering the bailouts and how the big banks and the government have merged. His most recent piece, Secrets and Lies of the Bailout, is required reading for anyone who wants to understand what has happened to our banking system.

In the attached video Taibbi talks with the folks at MSNBC, and they seem actually surprised that things are as bad as they are. You can almost see the thoughts floating across their frontal cortex’. “This stuff all happened under Obama. But that doesn’t make sense! Government helped make the big banks even richer, a lot richer? That doesn’t make sense. Matt Taibbi must work for the Daily Caller or something. No, he works for Rolling Stone. That doesn’t make sense. This doesn’t fit at all with the talking points issued this week!”

One thing, which I wish Taibbi had emphasized more is that it looks increasingly like credit would not have “seized up” across the board, for very long anyway had the big banks been allowed to fail. The mid-sized banks and the community banks, which lacked exposure to much in the way of toxic assets (because they sold them off to the big banks which then folded them into Mortgage Backed Securities) would have survived. It would have been bumpy but well run banks just outside of big bank status, BB&T for instance, would have filled in the space.

The bailout was, as David Stockman says, a Wall Street crisis. The bankers all freaked out when their bets turned terrible, and then played the information leverage game with Washington to get the tax payers to pay for their mistakes. They basically said that the entire economy was going down (it wasn’t) and therefore an unprecedented abandonment of what was left of our market based economy was justified. It was a giant con.

10 comments
Sharon Reinfeld
Sharon Reinfeld

Just like the fiscal cliff. . . how many more lies will they spin?

Robert Circle
Robert Circle

Why lie when half the truth will work just fine....

Aidan Haggerty
Aidan Haggerty

They were too big to rescue. Also the government created a moral hazard...we're paying the price still.

Fred J Tackett
Fred J Tackett

man, this is a surprise, i just lost all faith in the gov. i cant believe they would lie like that, some one must be making these stories up.

Joe Reesman
Joe Reesman

We have a failed govt. now in this Obama admin. because it is too big.

George Mcfarlin
George Mcfarlin

A failure of a company is an opportunity for competitors to step in to the void.

Chris Ellsworth
Chris Ellsworth

There IS no such thing as 'Too Big To Fail'. We I believe are about to find out that this is true at Nation State level also.

Keith Weiner
Keith Weiner

As preamble, let me state that I am no defender of bailouts. But I think that if they did not provide bailouts, the whole system would have collapsed. Why? It's insolvent in aggregate? Why? Because since 1971, there has been no extinguisher of debt in the system. A dollar is itself a debt instrument. You cannot pay off a debt with another debt (though you can take yourself out of the debt loop). Debt grows every year. Exponentially. Now the whole world is bankrupt and if the props are removed (which I do not predict) or in any case when they run out of capital to consume, there is going to be a total collapse.