Sigh. I've said it before I'm saying it again... this sucks.
We bore witness this week to Lehman Brothers collapsing, Merrill Lynch getting bought by Bank of America, and then AIG (American International Group, a major player in the insurance racket) getting taken over by the U.S. government in an unprecedented act that effectively nationalized the company (something free-market capitalists like the Republicans in charge would consider a supreme act of evil... if a Democrat did it).
Pile this all on top of the previous government actions involving Bear Sterns, and total in about ten other large-scale banks failing inside of one year which is more than the total number of failed banks we've seen from 2000 to 2006. Let's be blunt, we are witnessing the biggest financial crisis since the Savings and Loans scandals of the 1980s. Only this is waaaaay bigger, where the S&L mess cost us $150 billion this subprime mess is going to cost $1 TRILLION! We're talking, yes we are, a Depression-level economic collapse, especially as you can throw in the high gas prices affecting inflation, the rising unemployment, and about fifty more economic factors that scream DISASTER.
I said it then, I say it now:
Why do we keep doing this? Why do we keep letting these financial institutions ramp up the greed and corruption until they choke on their own disasters, only to have US, the people who got ripped off in the process, to pay the damn bills? They get us coming and going.
I'll tell you why. Because these financial fat cats buy off the politicians on both sides of the aisle - Republicans and Democrats both - to do nothing until it's too late. Freaking legalized bribery.
Nothing this week has convinced me otherwise. From all that I've read, most of this current disaster points back to one law: the Financial Services Modernization Act of 1999. It allowed disparate economic institutions - banks, insurers, investing firms - to merge, compete, merge, make back-alley deals, develop questionable investing practices, perform acts of creative accounting, and allow themselves free parking at all the football games. It repealed an earlier law that had been introduced in 1933, Glass-Steagall, which had placed regulations and restrictions on banking and investing to curb the excesses of the 1920s that had led to the Great Depression. Now we see why. Thank you Phil Gramm.
The politicos are bending over backward now, especially regarding AIG, to make sure the entire stack of cards for our economy doesn't completely collapse, by stabilizing the top-end of the economy. Those of us at the bottom-end of the economy - the workers, the taxpayers, the people who played by the rules and the people who got played by the con artists running our markets - are going to get stuck paying the bill. AGAIN.
And this ISN'T OVER YET. The economists and political observers are all still muttering that the damage done by the crazy subprime mess and shifting financial trickery by the major institutions hasn't been fully contained yet. There's still a lot of damage yet to occur. There's still also the economic backlash to occur with all this public debt getting bigger.
All because the Republicans wanted to deregulate banking and investing, and all because the Democrats played along because the money was too good. All because of unchecked greed.