Our financial crisis, this bailout, and Bush

This post kind of got away from me, but here goes.

I'm following up on a tweet I sent last night:

Mark my words: this treasury-led bailout authorization will be the patriot act of finance. Approved quickly and largely regretted.

A lot of great stuff came my way as I thought about this post.

via @mpakid, this gem in Huffing ton Post by Sen. Bernie Sanders (D-VT)    -  The Middle Class Must Not Be Forced to Bail Out Wall Street Greed.

These are the last days of the Bush administration, the most dishonest and incompetent in modern American history. It is imperative that, at this important moment, Congress stand up for the middle class and for fiscal integrity. The future of our country is at stake.

I watched Friday's episode of Real Time with Bill Maher, and Nation columnist Naomi Klein's book, Disaster Capitalism seems to speak directly to my point of the politicization of our disaster (dot-com bubble, 9/11, Katrina, others she points out, I still need to read the book and I'm not sure I'll 100% agree with it) recovery policies  to consolidate executive power and secure privilege and wealth for friends of the administration. 

The political friends of the Bush Administration over the last 7 years who supported the deregulatory policies which to some degree created this mess, have benefited enormously.  Could it be that the very people who benefit most from these bailouts were at the table helping to decide government policy?  Thanks but no thanks.

This is no less than raid on America. Taking advantage of the opportunity of the moment to rob us of measured, reasoned, policy discussions. The media don't help- Al Gore's Assault on Reason was an excellent treatise on that front.

NYU's jay rosen  via twitter referred to this episode of This American Life

NPR's Adam Davidson, reporter on "The Giant Pool of Money," agrees with me: the bailout is a huge transfer of power to the executive branch.

Mr. Davidson's piece yielded this (de)construction about the us vs. them reality:

Now, until this moment we had a theory that these two groups--the homeowners
and the people at the top of the chain, the investors--had no idea about each other. 
We actually learned they know quite a lot about each other. They just see each other
through a computer screen.

This conflict is the matrix, an artifice which has been pulled over our eyes to blind us to the truth.  We shouldn't be focusing on whether the homeowners or the lenders are the bad guys.  The "bad guys" are the ones who exploit the rules they asked for, and now require a bailout that they help to negotiate??

We're bailing out the people who claimed we needed to give them more room to operate.  To create impossible-to-value derivatives, who took out insurance policies on the uninsurable investments they made?  I'm not saying regulation is always the answer, but sometimes markets fail.  Anyone remember the blackouts in California in 2001?  Deregulation at its level best.

The NPR work makes it evident that there was just SO. MUCH. MONEY. $70 trillion. How much is that?

Think about all the money that people spend everywhere in the world. Everything you bought in the last year, all of it. Then add everything Bill Gates bought. And all the rice sold in China and that fleet of planes Boeing just sold to South Korea. All the money spent and earned in every country on earth in a year: that is LESS than 70 trillion, less than this global pool of money. 

It came from pension funds and all manner of private investment, and especially from nations with oil, and huge trade surpluses, and rapidly growing economies.  The search for where to put this money, to earn more than the absurdly low risk-free return (US Treasury notes, at 1-2% ish)  gave rise to opportunities to invest in the mortgage backed securities, and incentives to do crazier and crazier things.

I think a lot of people, particularly people like me who, "have never known a US economy that wasn't growing," might be grasping for what this is all supposed to mean, and how this all happened. 

There was a time when I thought I was pretty far ahead of the curve for even understanding what a CDO was, in 2006.  Probably only a few of my friends (which includes a few who tried lead generation and mortgage brokering, and a lawyer who puts together the contracts for the securitization of these mortgage pools) really knew about this anytime before 2007.  Or they knew parts of it.

I'm no expert, but I'm sure a citizen.  And this whole thing is a mess, requiring every bit of vigilance we can muster.  This $700 billion bailout is Disaster Capitalism.  It's crisis policymaking, especially given the proximity to the end of the congressional session.  The impossibility of disagreeing with this bailout is the same way we were blinded with the Patriot Act, which was then and is now an unreasonable incursion on the territory of essential liberty.