A totally killer run down of the Wall Street mess from — you’ll never guess it — Rolling Stone magazine:
There are plenty of people who have noticed, in recent years, that when they lost their homes to foreclosure or were forced into bankruptcy because of crippling credit-card debt, no one in the government was there to rescue them. But when Goldman Sachs — a company whose average employee still made more than $350,000 last year, even in the midst of a depression — was suddenly faced with the possibility of losing money on the unregulated insurance deals it bought for its insane housing bets, the government was there in an instant to patch the hole. That’s the essence of the bailout: rich bankers bailing out rich bankers, using the taxpayers’ credit card.
The people who have spent their lives cloistered in this Wall Street community aren’t much for sharing information with the great unwashed. Because all of this shit is complicated, because most of us mortals don’t know what the hell LIBOR is or how a REIT works or how to use the word “zero coupon bond” in a sentence without sounding stupid — well, then, the people who do speak this idiotic language cannot under any circumstances be bothered to explain it to us and instead spend a lot of time rolling their eyes and asking us to trust them.
That roll of the eyes is a key part of the psychology of Paulsonism. The state is now being asked not just to call off its regulators or give tax breaks or funnel a few contracts to connected companies; it is intervening directly in the economy, for the sole purpose of preserving the influence of the megafirms. In essence, Paulson used the bailout to transform the government into a giant bureaucracy of entitled assholedom, one that would socialize “toxic” risks but keep both the profits and the management of the bailed-out firms in private hands. Moreover, this whole process would be done in secret, away from the prying eyes of NASCAR dads, broke-ass liberals who read translations of French novels, subprime mortgage holders and other such financial losers.
It’s a long read, but completely worth your time. The left can’t get a grip on the Rotarian half of Rotarian Socialism, so the writer mostly sees the world through a Marxist lens — big versus small, as against connected versus clueless. Even so, this is a nice little snapshot of oligarchy aborning.
Thomas Johnson says:
Since the Clinton administration, the U.S. Secretary of the Treasury’s primary job has been to protect Goldman Sachs. The rest is just plebeian chatter, mildly amusing to the crony capitalist kleptocrats.
March 24, 2009 — 7:40 am
Mark Madsen says:
I read that a few days ago. It will probably take a couple more times before I can get a full grasp of the details, but it really helped me understand the history behind CDOs.
Also, the politics that were discussed in that article were scary. It seems like key players on Wall Street just got a bunch of powerful government jobs so that they can give their banking buddies more of our tax dollars to gamble with. I’ll be reading more.
March 24, 2009 — 9:13 am
Michael DiMella says:
I have to say – I love Taibbi, no matter what he’s writing about it’s always entertaining. There’s another great article by Michael Lewis about the financial meltdown called “The End” in Conde Nast Portfolio. It’s from December I believe, but it will make you as sick to your stomach as the Rolling Stone article…
March 24, 2009 — 10:39 am
Daniel says:
This was a good piece. Another good piece is called “No return to normal,” Galbraith thinks the banking industry won’t truly be back on it’s feet for a long while and the govt may actually have to hire people WPA style:
http://www.washingtonmonthly.com/features/2009/0903.galbraith.html
March 25, 2009 — 7:38 am
Doug Quance says:
Greenspan recently said that we are doomed to repeat this kind of episode time and again, as human nature is at the root of the problem.
The government can try to regulate it – but the powers that be will find a way to make an end run around it… or in this recent example – they’ll buy their way through it.
Cassano and the rest of his ilk should be stripped of their ill-gotten gains and tossed in prison for this mess. Feel free to add Franklin Raines, Jamie Gorelick, and all the other thieves at Fannie and Freddie while you’re at it.
March 25, 2009 — 9:53 am