January 11, 2008
Steaming
All of us here at Dakota have only been paying marginal attention to the subprime mortgage crisis. However there's nothing like a jaunt to foreign shores to help one notice just how much cache the American dollar has lost.
Robert Kuttner explains the situation, and its impending catastrophe very clearly, just in case you're not up to speed.
Even if one were Republican and could easily overlook the tragedy of tens of thousands of poor people losing their homes, one might be very concerned about the general economic crisis that's resulted. You know, having to make do with smaller scoops of Beluga on one's toast points, or metaphorically speaking, the prospect of having to switch from the black to the red. But we digress.
In August, American Home Mortgage, the tenth largest retail lender in the nation went bust, and Countrywide Financial another subprime giant, is close behind. Of course,the former CEO of Countrywide, used his intuititive prescience to dump all his stock over the last two years at a fine profit, and was rewarded with a generous settlement for his stellar leadership in sinking the shop. What else is new?
Not to worry, there is wonderful news! Bank of America is going to buy out Countrywide, thus saving the American economy from collapse. Isn't that nice?
Now, ask yourself, why would a big bank like BOA want to buy a mess like Countrywide? Herb Greenberg picks through the obfuscation, and discovers that the Federal Reserve is going to guarantee that Bank of America is takes no risk whatsoever.
When the Federal Reserve steps in to rescue a crappy mess made by unmitigated greed, who do you think pays through the nose, besides those poor folks who lost their houses in the bargain. Me and you, the American taxpayer, who already unwillingly support war profiteers in Iraq.
The supprime crisis is yet another case of government deregulation, as advocated by the Bush administration, allowing greed to prevail over sound policy, and in the end, devastate the economy - with of course juicy profits for those in the upper echelons.
Oh, but we learn from our mistakes. Last time we weren't watching the greedy bastards precipitated the savings and loan crisis
The ultimate cost of the crisis is estimated to have totaled around USD $160.1 billion, about $124.6 billion of which was directly paid for by the U.S. government [2], which contributed to the large budget deficits of the early 1990s. The resulting taxpayer bailout ended up being even larger than it would have been because moral hazard and adverse-selection incentives compounded the system’s losses.
Oh, and who do you think was in the thick of that massive public robbery?The Bush Family. Perhaps if someone had to serve time in one of our many crowded private prisons, it might have served to curtail this kind of behavior.
Photo note: Steam and clouded visiblity, a methaphorophoto of sorts. Shot through the window while waiting in line for admission into the elaborate Neobaroque Szechenyi Baths in Budapest. There is a "no camera" rule inside. The timid photographer was hesitant to disobey this rule because it was printed so clearly in English. The outside temperature was 25 degrees, and the pools heated to 100, thus the roiling steam, which renders most bathers invisible. A divine experience. A slideshow, and shots by a braver parties
Posted by Dakota at January 11, 2008 07:53 PM