At The Intersection of Wall Street and Washington

Just in case you are still confused by what is going on at the intersection of Washington and Wall Street, Matt Taibbi at Rollingstone.com has written one of the best explanations of the financial destruction the United States now faces.  He points out, as I believe, that the solutions the Fed and Treasury are now implementing are going to be far worse than the problems that would have occurred.  And he points the finger squarely at Congress, which was in Wall Street's back pocket, for allowing the financial services industry to deregulate in the late 1990s.  In its greed, Congress forgot the lessons of the 1930s, when all the original regulations were implemented.  Now, the same people that got us into this mess are trying to get us out, and, most likely, it will end badly.  

Matt Taibbi explains…   

It's over — we're officially, royally fucked. No empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.

The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history — some $61.7 billion. In the final three months of last year, the company lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).

So it's time to admit it: We're fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we're still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream. When Geithner announced the new $30 billion bailout, the party line was that poor AIG was just a victim of a lot of shitty luck — bad year for business, you know, what with the financial crisis and all. Edward Liddy, the company's CEO, actually compared it to catching a cold: "The marketplace is a pretty crummy place to be right now," he said. "When the world catches pneumonia, we get it too." In a pathetic attempt at name-dropping, he even whined that AIG was being "consumed by the same issues that are driving house prices down and 401K statements down and Warren Buffet's investment portfolio down."

Read the rest of the article here.

31 thoughts on “At The Intersection of Wall Street and Washington”

  1. A good article to follow up this one, AT LINK:
    “As CMOs became more complicated, my job was to make everything seem simple—to, in effect, mask the complexity that would’ve made the bonds difficult to trade. We invented a language for mortgage-backed bonds. I called it BondTalk. Lehman was a runner-up in CMO underwriting. I was told to rewrite the entire system. Make it all push-button. Flexible and faster. Traders told us what they wanted, and we wrote the software code to make it possible. We were on the cutting edge. When I finished that project, I approached my former boss to ask if I could move to the trading desk, to where the big money was.

    “Mike,” he told me when denying my request, “can you really look for people dumber than you and then take advantage of them? That’s what trading is all about.”

    http://nymag.com/news/business/55687/

  2. raivo pommer-www.google.ee
    raimo1@hot.ee

    PEUGEOT CRISE

    The board of PSA, Europe’s No. 2 automaker after Volkswagen, cited “the extraordinary difficulties currently faced by the automotive industry” as its reason for replacing Streiff with Philippe Varin, currently the boss of steelmaker Corus. But Streiff, 54, had alienated other top PSA managers and infuriated the French government by vowing to shrink the group’s payroll-even after receiving a nearly $4 billion government bailout that was supposed to protect jobs.

    Although rumors had circulated for weeks that Streiff’s job was in danger, the announcement clearly caught him off guard. Through an outside spokesman, he issued a statement calling the board’s decision “incomprehensible,” adding, “The policies we defined and put in place over the past two years have left PSA well-armed against the current crisis.” Investors didn’t seem happy, either: PSA shares sank more than 9 percent on the news of Streiff’s departure.

  3. raivo pommer-www.google.ee
    raimo1@hot.ee

    Koninklijke familie bezoekt gewonden

    – Koningin Beatrix, prinses Margriet, Pieter van Vollenhoven, prins Willem-Alexander en prinses Máxima hebben zaterdag gewonden van de aanslag afgelopen donderdag in Apeldoorn bezocht in diverse ziekenhuizen.
    afbeelding vergroten Koningin Beatrix heeft zojuist een bezoek gebracht aan de Isala kliniek in Zwolle, waar een gewonde van de aanslag tijdens Koninginnedag verblijft.
    Ze spraken ook met familieleden. Dat heeft de Rijksvoorlichtingsdienst laten weten.

    De koningin ging op bezoek in de Isala Klinieken in Zwolle. Prinses Margriet en haar man Pieter van Vollenhoven bezochten het Rijnstate Ziekenhuis in Arnhem. Willem-Alexander en Máxima hebben slachtoffers opgezocht in klinieken in Tilburg, Utrecht en Amersfoort.

    Bij de aanslag kwamen zeven mensen, inclusief dader Karst T. uit Huissen, om het leven. Acht mensen liggen nog in ziekenhuizen.

    Volgens een woordvoerder van de RVD hebben de leden van de koninklijke familie zes gewonde mensen bezocht en gesproken. Twee andere slachtoffers waren niet aanspreekbaar. Koningin Beatrix sprak met twee slachtoffers en hun familie en met naasten van de twee slachtoffers, die de koninklijke familie niet kon bezoeken. Er is in de klinieken geen aparte bijeenkomst met artsen of verpleegkundigen geweest. Wel was de naaste familie van de slachtoffers speciaal uitgenodigd.

    Prinses Margriet en haar man zijn zaterdagmorgen bij een gewonde in het Rijnstate Ziekenhuis geweest. De Prins van Oranje en prinses Máxima zijn zowel ’s morgens als ’s middags op pad geweest en spraken drie mensen. Koningin Beatrix legde haar bezoek in Zwolle in de middag af en is even na vier uur naar Den Haag teruggekeerd. De koninklijke familie wilde haar belangstelling voor de slachtoffers zoveel mogelijk privé houden, aldus de RVD.

  4. I searched for this theme! The board of PSA, Europe’s No. 2 automaker after Volkswagen, cited “the extraordinary difficulties currently faced by the automotive industry” as its reason for replacing Streiff with Philippe Varin, currently the boss of steelmaker Corus. But Streiff, 54, had alienated other top PSA managers and infuriated the French government by vowing to shrink the group’s payroll-even after receiving a nearly $4 billion government bailout that was supposed to protect jobs.

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  6. So it’s time to admit it: We’re fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we’re still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream

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  12. Hey Connor, yeah I’ve been following it via Felix Salmon’s blog at Reuters too:June 24th: Matt Taibbi vs Goldman SachsJune 26th: Goldman Sachs reodsnps to TaibbiJuly 7th: Matt Taibbi Taibblog On The Everyone Was Doing It Excuse True/Slant

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  15. So it’s time to admit it: We’re fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we’re still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream

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