Monday, April 06, 2009

Obama, you're screwing up the financial crisis

The more I read about Obama's handling of the financial crisis, the more he sounds like a shill for the financial industry. Paul Krugman and Glenn Greenwald, both of whom were extremely outspoken in their criticism of Bush's policies, have been scathing in their critiques of Geithner's bailout plans. And the close ties between the financial industry and Obama's economic advisors are rather chilling. Dday on Hullabaloo:
Here's the story so far:

Banks lost a ton of money by making terrible bets based on fanciful notions that housing prices would go up 20% year over year approximately forever. All the while the executives sat on each other's boards and handed out giant bonuses and compensation packages to each other while the financial sector grew essentially out of control. In the process, they used their money and power to effectively buy Capitol Hill and make sure their portion of the economy could keep growing, whether through usurious interest rates, a total lack of oversight (including by some of the same people now charged with overseeing the banks) or just massive wealth transfers. When everything came crashing down, the very last thing these banking interests wanted to do was admit defeat or give back any of their money and power. At the same time, the entire country was furious at them. So they set to work bribing who they knew would be top officials in the next government, people like Larry Summers, who honestly didn't even need to be bribed. And every time Congress or the executive branch threatened to end their party and put limits on their power, they found in Summers and other officials a willing partner in subverting the rules that would make them give back their bonuses and excessive compensation, which by the way the taxpayer is funding. We, the taxpayers, are told that this is necessary to ensure financial sector participation in the program to rid the banks of all of their bad assets at a potentially massive taxpayer expense. However, left unsaid is the fact that the same banks are planning to game the system by passing the same bad assets back and forth among each other at high prices, and using tricky accounting tactics to pretend that the assets on their books have value.


Anonymous Toronto Real Estate Agent said...

"...that housing prices would go up 20% year over year approximately forever."

That's the horrible mistake that caused all this. I wonder every day how could they have assumed such a thing. Nothing stays the same forever. Just because the prices have been rising constantly for the last decades doesn't mean there can't be a catastrophe that will ruin this all. Were they not thinking about that? Greediness for money overcame the intellectual thinking, that's my guess.

Take care, Julie

5:24 PM, April 07, 2009  

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