So last night I watched the HBO TV film Too Big Too Fail, and even though I was already well versed in what led to the economic disaster of 2008, some things still surprised me.
1. Exactly what went into the behind the scenes negotiations the days of and how much power the banks actually had in negotiations for THEIR handouts. They set terms and conditions on that money. That’s right, THEY said how the money would be spent or they wouldn’t take it. As one character remarks “They almost bring the entire economy crumbling, but we can’t put restrictions on the money we’re giving them because they might not take it?” If you don’t remember someone in the welfare line being that picky after one of these same banks foreclosed on their house, you’re not wrong. It just goes to prove my point in last week’s WCE that the banks have gotten everything they’ve wanted for so long, any restrictions–even after global economic catastrophes triggered by deregulation–feel like tyranny.
2. That since that time the largest banks that were deemed “too big to fail” are even bigger. A chilling caption at the end of the movie revealed that almost 77 percent of business is conducted at one of the financial institutions the movie covers. They almost wreck the entire global financial system due to being too large, unwieldily, and deregulated, but instead of breaking them apart, or–at the very least–regulating them, they’ve been allowed to not only prosper but grow in size?
And Republicans still feel so strongly against deregulation that all of the major GOP candidates for President say they want to repeal Obama’s Banking Reform Act. A repeal exactly 0.01 percent of the population is asking for on a law that already doesn’t go far enough. Republicans say they are fiscally responsible because they voted against the bailouts of the major banks, but that would have imploded our financial system and brought about something worse than The Great Depression. It’s like your mom constantly feeding your ice cream for years, but when you get too fat, she doesn’t feed you at all, but somehow the parents down the street imposing restrictions on ice cream are the bad guys. It’s too little, too late and at the exact wrong time…otherwise known as a typical GOP response.
It is a miracle that one political party could so strongly be against regulation or any restrictions on capitalism whatsoever (even changing the laws under Reagan) that they can wake up and have collective amnesia. That they could so strongly believe the rich drive the US economy, they forget that deregulated wealth or Rich Gone Wild almost drove the country off a cliff in 2008.
Problem is that when institutions that are too large to fail like AIG have serious money problems, the only thing big enough to bail them out is the US government…which may no longer be able to bail them out. All over Europe we are seeing what happens when a country repeatedly can’t honor it’s debt and I don’t have to be crazy to not think Greece, Portugal, or Ireland is where this country should be headed. US corporations point to Ireland’s tax structure (less than half of the US’s) and deregulation as part of the path we should go down, not forgetting that they’re in worse fiscal shape than we’re in.
Then the counter argument is “Well the US isn’t Greece, we’re too big to fail as the world’s largest economy” not taking into account we may not always be that. If we keep bailing out deregulated, sloppy, gluttonous banks that only think about the next quarter over long term financial health, we definitely won’t be. AIG might be too big to fail, but America isn’t.
That movie scared the shit out of me. I had no idea how close we really came.
I don’t know what this guy is talking about…it’s completely natural for a private institution like a bank to almost go bankrupt and rape the tax payers out of money that should go to the poor to bail us out.