Except this isn't cool at all.
I've come across an article from my newfound 'personal newspaper'. On the one hand, I've found it too disturbing to fully distill here. I'm afraid of my hyperbolic potential. Plus, this blog isn't intended as a home to geo-political commentary; I'm just not a very geo-political person. On the other hand, my moral compass impels me to share it.
Therefore, with the reader's understanding, I'll summarise the facts as I understand them. A recent law was passed by the US Congress requiring the Fed to open its books on the bailout. Firstly, well done Congress. It’s a testament to democracy. Commentators are just starting to pick through the mountain of paperwork - apparently over 21,000 transactions.
In itself, I found this number shocking. I thought the bailout was just a few payments to a few large banks. Am I alone? I've read two books on the crises, and although I'll admit they were more about the general financial conundrum than the specific bailout decisions, I felt educated and would have guessed 50 major bailout transactions. Twenty-one thousand? So there were 21,000 separate and distinct payments, bound my contractual law, agreed in the haste of that financial and political cauldron? This number alone, in that environment, began to prepare me.
I've always understood corruption existed in America. I've factored it in alongside poor Referee/Umpire decisions in sport. Sure, the Braves would have won (at least) 3 World Series in the 90s without crap umpires, and yes, it was amazingly painful to be the best team of that decade but lose that official mantle to the team of Mickey Mantle. But we had our chances and that's the way the cookie crumbles. The Braves were not robbed.* We simply lost a few close games by a few inches, and since we won a few that way, all was right in the world (if not exactly fair). This was my perception of corruption in today's America: both common and criminal, but hardly a major factor in the general swing of things. Was I naive, ignorant or stupid?
The article to which I refer was just published in Rolling Stone. Whilst Rolling Stone is certainly a left-leaning publication, a) this article criticises left and right equally and b) their standard of journalistic integrity is strong to my knowledge. I'll only include an excerpt.
"Instead of lending directly to car buyers and credit-card holders and students — that would have been socialism! — the Fed handed out a trillion dollars to banks and hedge funds almost interest-free. In other words, the government lent taxpayer money to the same people who caused the crisis, so that they could then lend that money back to the taxpayer on the market virtually risk-free, at an enormous profit.
"Cue your Billy Mays voice, because wait, there's more! A key aspect ... is that the Fed doles out the money through what are known as non-recourse loans. Essentially, this means that if you don't pay the Fed back, it's no big deal. The mechanism works like this: Hedge Fund Goon borrows, say, $100 million from the Fed to buy crappy loans, which are then transferred to the Fed as collateral. If Hedge Fund Goon decides not to repay that $100 million, the Fed simply keeps its pile of crappy securities and calls everything even."
Out of respect for anyone who doesn't read me for politics, I'm stopping there. But this is simply the most easily digestible excerpt. There's more (like the $200 million given to a banker's wife).
I hope this article isn't accurate. I hope it's a bunch of invented hippy claptrap. But it sounds to me like it might be the tip of the iceberg. If it is, I hope it is. It would be an unfortunate boon to the capitalism inferred in the Federalist Papers by James Madison (vs Alexander Hamilton or Adam Smith's faith in business/elite). It would perhaps be the painful truth needed to stem the tide of the plutocracy America seems to be becoming.
Hope springs eternal.
At least you see why I'm not very geo-political. This stuff is too bloody serious.
Rick.
* Do not talk to me about the '93 series against the Twins, and definitely do not bring up the name of umpire Drew Coble.
loving the blog Rick ;-)
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