These Are Not Accidents

The financial crisis was not an accident or series of accidents, as has been proclaimed by its progenitors and the involved industries and even much of government itself. It was the logical outcome of releasing large corporations from any sane regulatory restraint, and worse, in many cases writing new regulations specifically allowing and encouraging extremely risky behavior.

With other people's money. And they got to keep all the profits. Personally.

Then there was the housing bubble, an intrinsic part of this grand theft of unsurpassed proportions, actively inflated by the Bush administration from pretty much day one of operations. The giant financial corporations and their many ill-spawned children were directly involved in creating a mortgage morass that now has companies foreclosing on homes they have no legal claim to, using an evidence free bald assertion process in letters to homeowners and the few courts in which they've been challenged to prove their "rights."

Which leads the ever spot-on Paul Krugman to note and ask:

The accounting scandals at Enron and WorldCom dispelled the myth of effective corporate governance. These days, the idea that our banks were well capitalized and supervised sounds like a sick joke. And now the mortgage mess is making nonsense of claims that we have effective contract enforcement — in fact, the question is whether our economy is governed by any kind of rule of law.

In fact, it is governed by a kind of rule of law, the law that the rich and powerful create on the fly and assert behind the cover of armies of lawyers trained in the arcana of the regulations these same corporations wrote in rooms just off the floor of Congress in the late 1990s and all of the 2000s. And Krugman is also correct when he talks in that same cloumn about the essential character of every Obama response to the banks, mortgage companies and other criminal organizations and their leaders - utter deference in all things. 

The Revolution Will Not Be Televised

Getting lost in the details of the financial meltdown can have the perverse effect of diffusing righteous anger directed toward those who set this entire destructive wave in motion.

Matt Taibbi delves back into those details and reminds us why we should be "mad as hell" and not take this lying down.

People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.

The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

The conservative fantasy that everyone in the financial services sector, or anyone in the entire corporate world, for that matter, are rational actors who behave reasonably and cautiously has, at last, been utterly exposed as a grand lie. The only correct solution is to break the backs of these oversize, overly powerful giants and regulate the living shit out of them in future. Banks, brokerages, and insurance companies all made handsome profits prior to the frantic deregulation fetish of the late 1990s. Given how destructive their greed can be for the rest of us, strict regulation is the only rational response.